The global luxury goods market, which was massively impacted by the COVID-19 pandemic, is expected to recover to the pre-pandemic level in 2022, reaching USD 1,096 billion at constant 2020 prices. Sustainability is an increased focus area particularly for luxury players to engage with consumers moving forward.
The expansion of the circular luxury economy was one of the key drivers as the Asia Pacific region witnessed a strong recovery from the pandemic in the second half of 2020, at a much earlier stage than other regions. Vintage stores are becoming hot destinations for key opinion leaders (KOLs) and key opinion consumers (KOCs) in the Asia Pacific, driving the fashion value of vintage luxury goods and improving the image of “reuse” in the industry.
Experts in consumer goods industries are also aware of the rise in consumers’ social and political interests. According to Euromonitor International’s ‘The Voice of the Industry: Luxury Goods Survey’ in 2021, 65 percent of industry experts agreed that sustainability and environmental concerns would be a very influential trend for their businesses in the next five years, implying that there’s no longer a “wait-and-see” moment for the industry.
During and even before the pandemic, the global luxury industry has witnessed multiple initiatives by luxury houses that promoted the concept of sustainability in the industry, such as the launch of Nona Source, an online resale platform for materials from LVMH Fashion & Leather Goods Maisons, and Kering’s partnership with RealReal. However, the new initiatives, which suggest alternative options to promoting sustainability in the industry come from third parties. For example, Valuence Holdings, a Japanese reuse and technology company that operates a second-hand luxury goods supply chain in Japan and 13 other countries, introduced a new initiative called ‘Valuence Resale Impact Calculator’ in early 2021. It is a scheme to help visualise the amount contributed to reducing environmental footprint through their business, and it revealed that the circulation of luxury goods through Valuence Holdings has contributed to reducing 3.47 million tons of CO2 emissions annually. Valuence Holdings believes that visualising the contribution to the environment could add further value to the moment customers sell their luxury items, which should attract more individuals to participate in the circular economy with luxury goods.
Developing a premium and luxury selling experience is vital in developing circularity within the industry. COVID-19 has brought a new consciousness to the luxury landscape that goes far beyond merely compensating for a company’s negative impact on people and the planet, as consumers increasingly search for morally aligned brands. As a result, the definition of sustainability is evolving beyond ethical credentials and environmental concerns, and more towards purpose over profit. Luxury companies will need to take a more holistic approach and aim to create social, environmental, and economic value with their future business models.Written for FashionUnited by Euromonitor. Get to know Euromonitor here.