With Generation Z becoming adults and thus consumers, the sustainability decade is underway. It's widely known Gen Z is willing to reward brands that have a positive impact on the environment and society and disconnect from those that do the opposite. So luxury brands have to step up their game if they want to be agents of change when it comes to sustainability and they should act now. Bain & Company collaborated with sustainability specialist Positive Luxury to paint a picture of what a leading luxury brand might look like in 2030. Five strategic evolutions prove to be key in becoming thé sustainable luxury champion.
Redefining the purpose of a brand is essential as Gen Z's purchasing process and mindset are fundamentally different. A quick makeover will not be sufficient. Brands will have to rethink their entire work profoundly, focusing on sustainability, which is a long-term effort with no instant-payback investments.
Furthermore, brands will have to decouple growth from volume by producing sales growth without relying on volume increases, and minimize their environmental impact in the process. Possible ways of doing this are for example circular business models such as resale or rental and reducing overproduction by making more products to order, giving the consumer more personalization options in the process.
Making the supply chain fully transparent and traceable is also key to become a Gen Z approved luxury brand. The supply chain will have to be visually present in luxury shopping. Furthermore, supply chains have to be more localized and span fewer suppliers, with whom the company engages more deeply, aiming to improve environmental and social outcomes as well as quality and output. To get there, embracing technological advances, for example blockchain, are vital.
To become a sustainable champion, luxury brands have to maximize their environmental and social commitments. Some of them will progress measurably in a decade, others will prove to be harder to crack. However, where succeeded, a company must challenge itself anew with even more demanding targets.
Finally, companies have to create economic value from sustainability by developing a model that's central to its corporate performance. Key performance indicators that used to be marked under sustainability or finance, should be integrated successfully across the business, powering its decision making in areas such as customer loyalty.
In Bain & Company and Positive Luxury's vision of luxury's sustainable future, it's vital to approach sustainability in a holistic way that spans consumers, employees, suppliers, communities and all corporate departments. They drew on their research to paint a picture of what a leading luxury brand might look like in 2030. Furthermore, they describe some actions brands can embark on today to prepare for this decade-long journey.