What does luxury mean today?

From palm oil to plastic packaging, consumer awareness about sustainability issues is rapidly changing how and what we buy. But one industry has largely remained aloof – until now.

Traditionally the luxury industry has used opacity as a way to build mystique and desirability, but the younger generation of luxury consumers expects and demands transparency. Millennials matter to the luxury goods industry: they are the world’s biggest generation, and their global spending power will soon be greater than any other generation, according to forecasts by World Data Lab. They are also willing to spend more on sustainable goods, according to a 2018 report by Nielsen. A recent Deloitte report on young luxury shoppers found that nearly a third considered a brand’s ethical credentials before making a purchase. In order to seduce the new luxury consumer, the industry has to change.

“Consumers, especially the Millennials, who are the growth engine of luxury demand, are becoming more and more aware and involved in sustainability issues. Therefore sustainability choices are influencing more than their purchasing behaviours,” says luxury-industry consultant Mario Ortelli.

Change isn’t just being driven by customers, but investors too, he adds. “They, who have to put a lot of attention into the risk profile of their investments, are focused on sustainability… because a negative sustainability story can do serious damage to the brand in which they invest.”

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