financial times

CSR and Luxury in an age of Transparency

Isaac Mostovicz writes that that the luxury industry is becoming more tuned in to Corporate Social Responsibility...

I have recently written on the link between luxury brands and Corporate Social Responsibility, or CSR, so it was with interest that I read the Financial Times blog post “Luxury conquers its CSR fear” which reported that the luxury industry is slowly beginning to talk about sustainability and CSR more openly.

The article gives the example of luxury jewellery brand Tiffany & co. who have recently launched a new website dedicated to CSR. This is interesting because a few years ago the author of the Financial Times piece ‘graded ‘some public luxury companies in CSR categories, and Tiffany did particularly badly, in part due to a lack of public information.

Tiffany & Co: CSR section of the website

Tiffany & Co: CSR section of the website

It looks as though, the article argued, luxury brands have realised that in an age of transparency it is better to have information out there for consumers to see, rather than hiding information behind closed doors in the fear that consumers will pick holes in it.

It is not just Tiffany that is doing well – LVMH also has a section on CSR on their corporate website, with an environmental charter.

This article illustrates that the luxury industry is beginning to change, and  I believe that sustainability and luxury are no longer mutually exclusive terms. This not only makes good sense for the long-term prospects of the brands in question, but can also be a positive attribute in luxury marketing – particularly if the brand aligns its CSR initiatives to core brand values and identity, and resonate with consumers.

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Luxury products as alternative investment

Isaac Mostovicz writes that that luxury consumers are putting their money into tangible goods...

With the rise in protests rebelling against supposedly growing inequality, and the palpable economic uncertainty in the West’s financial institutions, it might be assumed that luxury purchases would be seen as just that – a luxury that cannot be afforded given the current climate.

However, the luxury consumers disagree, as a recent Financial Times blog post highlights.

According to Bain & Co’s 10th annual Worldwide Luxury Goods Market study, 2011 is going to be a record-setting year for the luxury goods market, with sales increasing by 10% from their current value of €173bn.

Cartier gold bangle

Moreover, the demand is emanating from the very areas – Western Europe and the US – that have seen this recent economic uncertainty, not just the emerging markets of Shanghai and Mumbai. Bain predicts that sales in Europe will rise by 10% and those in America by 16%.

As unemployment continues to rise in these areas, it seems counter-intuitive that demand is so high, particularly in the very visible branded jewelry and watch markets.  However, Bain claims that this actually makes sense, and that the wealthy are eschewing volatile banks and devaluing bonds and instead putting their money into tangible (and portable) goods.

“…the affluent have adopted luxury products as a form of alternative investment.” (Financial Times)

In the Financial Time’s Vanessa Friedman’s words, they are “sewing their gold and silver and diamonds into their garments” for security, with branded goods remaining the most popular, despite a growing demand for understated and logo-free luxury.

That Cartier gold bangle?  It’s a serious business investment for the luxury consumer.

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