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  • Writer's pictureEvelyn Chen

Luxury brands should follow the example of Kering

Kering is a company which primarily designs, manufactures and markets high-end luxury products. The company’s portfolio of high fashion brands includes Gucci, Alexander McQueen, and Stella McCartney.

Since 2005, François Jean Henri Pinault has been the CEO of Kering. Thanks to François Pinault, Kering is a market leader in sustainable fashion. In the early 2010s, he implemented the "environmental profit and loss" (EP&L) accounting method, in line with the UN's Sustainable Development Goals, that was gradually applied to all the brands owned by the group. By 2018, Kering was named top sustainable textile, apparel and luxury goods corporation in the Corporate Knights Global 100 index.

Due to the Covid-19 pandemic, many retail firms have suffered from less demand for their products; in some cases, this has led to entire firms going bankrupt. For the luxury retail industry Kering is a part of, demand for their products has fallen more sharply than for the regular retail industry because the pandemic had dissuaded many consumers from spending their money on luxury goods. In the future, many consumers may stop buying luxury goods and switch to buying sustainable and ethical goods instead, leading to the fall of firms such as Kering.

However, I believe that Kering is the exception to this rule because of its leaderships’ decisions. Since 2005 Kering has focused on promoting sustainability and social justice through setting up foundations, hiring more diverse staff and changing the way their products are made. In recent years, Kering has invested heavily in its e-commerce platform, which resulted in it not losing as many sales as other retail firms such as J.Crew, which did not have a great online platform. Due to the strategies implemented by Kering years before the pandemic hit, Kering will do well through this pandemic and beyond.

Traditionally, the reason why consumers buy luxury fashion is due to conspicuous consumption: the purchase of goods or services for the specific purpose of displaying one's wealth. However, luxury today is no longer about conspicuous consumption but how a brand or product makes the consumer feel.

The Deloitte Global Powers of Luxury Goods 2020 argues that consumers who buy luxury items are not doing it to show their wealth, but rather because the products make the consumer feel good while wearing or using them. Millennials and Gen-Z consumers value sustainability and environmental impact as well as social justice such as female empowerment in the clothes they buy. This affects the fashion industry a great deal because these generations are expected by 2025 to account for approximately half of all personal luxury good sales. Therefore, many luxury fashion brands, whose only USP is that they are very expensive, may see their demand fall as consumer demand rises for brands which focus on being ethical.

In contrast to its competitors, Kering has been incorporating sustainability and social justice into its brands since the early 2010s, blazing a trail for other fashion brands to follow. In the early 2010s, the Pinault "environmental profit and loss" (EP&L) accounting method, in line with the UN's Sustainable Development Goals, was gradually applied to all the brands owned by the group. Kering was also one of the first companies to implement a Code of Ethics and Sustainability team. In late 2019, Gucci claimed to have achieved 100% carbon neutrality in its supply chain and operations, mainly through carbon offsetting measures. Recently, Kering announced that celebrity activist Emma Watson had joined the Board of Directors at Kering. Emma Watson is known for supporting sustainable fashion through her collaborations with various sustainable fashion labels, Vogue magazine and the Good on You App, a mobile app that allows consumers to check the sustainability credentials of clothing brands. Hiring Watson allows Kering to advertise to her fans--mostly millennials and Gen Z consumers--Kering’s commitment to sustainable and eco-friendly fashion.

On the social justice side, Gucci was the first luxury goods company to appoint a Global Head of Diversity, Equality and Inclusion. Kering is also the only luxury group listed in the Bloomberg Gender-Equality Index; it was listed since 55% of the Group leadership roles are women. Kering further demonstrated commitment to female empowerment by creating the Kering Foundation, an organisation dedicated to ending violence against women. The commitment Kering has invested into social justice encourages the fast-growing Gen Z and millennial consumer base, most of whom are supporters of social justice, to buy of Kering’s products.

If established luxury brands want to appeal to the younger consumer that was growing in purchasing power, they should adapt their marketing and business models to become more progressive in both social and environmental spheres. Doing so will not only improve the brands’ sales but also help improve the wellbeing of wider society and the planet as well.

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