Changing the Luxury Model

The following is an edited extract from Reimagining Luxury.

Luxury does not mean expensive, for the sake of it. In fact, luxury and sustainability are two sides of the same coin – why? Because the principles of sustainability and luxury are very much aligned. Both embrace innovation and a long-term perspective.

Luxury products are often designed to last, focusing on durability, high-quality craftsmanship, attention to detail and superior materials. This emphasis on quality resonates with the sustainability principle of favouring durable, well-made products that have a longer lifespan. By investing in luxury items that are built to last, people can buy less and buy better.

Similarly, sustainability advocates to conserve resources for future generations, advocating for practices that reduce environmental impact and promote social wellbeing in the long run. Additionally, there is a growing awareness of the environmental impact of luxury products, leading to the adoption of eco-friendly manufacturing processes, transparency and the use of renewable and more innovative materials.

Luxury products are often associated with exclusivity and rarity, leveraging this concept by producing limited quantities of goods, using unique or eco-friendly materials, and implementing innovative design approaches. This approach aligns with sustainability principles as it discourages mass production, reduces waste and encourages the appreciation of quality over quantity – furthermore, you would probably never throw away luxury items, you would repair, sell and/or gift them.

The principles of sustainability and luxury converge in the concept of conscious consumption. People are increasingly seeking products that align with their values and have a net positive social and environmental impact on the world. Although luxury is by no means perfect, it gives people the option to buy products that are aesthetically pleasing, combining high-end quality with a mindful operation of the entire business from recruitment to product development enabling people to feel good about what they buy, differentiate themselves and stay relevant in an increasingly conscious market.

The luxury industry has seen stable growth for the last 40 years, give or take. Despite this, luxury businesses, like other businesses, have no choice but to think about changes to their operating model, processes and structure, and social and environmental sustainability goes hand in hand with these all.

In a fast-changing world riddled with uncertainty, any business setting targets and commitments without changing the way they ‘always do things’ is taking part in a meaningless exercise.

Any operating model and action plan needs to deliver on sustainability goals and ESG metrics, to effectively manage risk, have a resilient business, reduce operating costs, gain better returns and/or effect change. Businesses could lean into exploring different models to future proof their businesses. For example:

1. Embrace Brand as a Service (Baas). Subscription models provide access to products or services for a recurring fee. This is not just exclusive to Spotify or Netflix; these types of models are also applicable to other sectors such as hospitality. For example, the Sea Containers London hotel launched its first subscription service offering their regular guest overnight stays, gym access and a truck for their personal storage, with monthly rates. Glossybox is one of the beauty industry darlings where you can subscribe to receive five new beauty products each month.
2. Sharing economic models enable people or businesses to share resources. These platforms facilitate peer-to-peer transactions and provide access to underutilized assets, promoting resource efficiency and flexibility – such as private jet companies.
3. On-demand models provide immediate access to products or services whenever needed. Companies like Deliveroo offer on-demand delivery services, while platforms like Upwork and Freelancer connect businesses with freelance professionals for on-demand work.
4. Digital marketplaces connect buyers and sellers, facilitating transactions and interactions, like eBay or Gumtree.
5. Circular economy models focus on minimizing waste and maximizing resource efficiency. These types of models are great for luxury. The quality and craftsmanship lend themselves well to embracing renting, re-setting, leasing, repairing, reselling, etc., creating more sustainable consumption patterns. Some good examples include Treasury Collective or Reflaunt.

Where luxury should excel is when talking about people rather than consumers. People are more than just consumers. They are the media, employees, partners, sons and daughters, but above all they are citizens.

The younger generations don’t like to be referred to as ‘consumers’. Neither do I, and I suspect you don’t consider yourself to be part of that group. Do you?

The power of individuals to choose is an expanding concern for companies – not least because of the increasing power of employees to choose in a market with more jobs than people and a growing flexing of their power to disrupt, create or destroy consensus as well as the power to destabilize.

Luxury cannot easily be defined – and it does not automatically come with a high price tag. It means different things to different people, and even in the luxury industry, the definition of luxury is changing. For health-conscious Zoomers, organic or premium food is considered a luxury, they prefer the supplements, snacks or smoothies that they see on TikTok over fashion. These foods are a status symbol and are used to communicate belonging to a specific cohort. The luxury market is witnessing growth in previously stalling or outdated market segments: for example, traditional silverware and crystal are dusted off and back on the table.

This represents a shift – instead of keeping special pieces for occasions, it is about elevating every day to spark joy in little things and have an emotional bond between the objects, the user and the memories that connect them. Living in the moment is something that this generation has done very well, and perhaps should not be frowned upon but occasionally embraced.

This performative kind of consumption is to Gen Z what logos and SUVs were to previous generations. It is a way to affirm status that is more subtle and based on lore as a currency. How do you demonstrate status in a world where everything is visible, and you can have everything within a minute’s notice? Perhaps it is about having the memories, the appreciation of past times and previous lives of the product. Zoomers are savvy and emotion-led collectors. They seek unique pieces, whether clothing or tableware, not just for aesthetic value but to elevate everyday moments and romanticize the mundane, as simple things make them feel special.

The younger consumers who have been deprived of many life-affirming experiences are adopting a hedonistic mindset to life. They defy convenience and quick fixes, creating an opportunity for products and experiences that deliver a maximalist joyful feeling.