The global luxury goods market, which has been heavily impacted by the COVID-19 pandemic, is expected to regain its pre-pandemic level in 2022, reaching $ 1,096 billion at constant 2020 prices. Sustainability is one area. increased interest, in particular for luxury players, to engage with consumers in the future.
The expansion of the luxury circular economy has been a major driver, as the Asia-Pacific region experienced a strong recovery from the pandemic in the second half of 2020, at a much earlier stage than other regions. Vintage stores are becoming preferred destinations for Key Opinion Leaders (KOL) and Key Opinion Consumers (KOC) in the Asia Pacific region, increasing the fashion value of vintage luxury goods and enhancing the image of ” reuse ”in industry.
Experts in the consumer goods industries are also aware of the rising social and political interests of consumers. According to Euromonitor International’s survey “The Voice of the Industry: The Luxury Goods Survey” in 2021, 65% of industry experts agreed that sustainability and environmental concerns would be a very influential trend for their businesses over the next five years, which means there is no longer a waiting time for the industry.
During and even before the pandemic, the global luxury industry witnessed several luxury house initiatives that promoted the concept of sustainability in the industry, such as the launch of Nona Source, an online resale platform of materials from LVMH Fashion and Leather Goods Houses, and Kering’s partnership with RealReal. However, the new initiatives, which suggest alternative options to promote sustainability in the industry, come from third parties. For example, Valuence Holdings, a Japanese reuse and technology company that operates a pre-owned luxury goods supply chain in Japan and 13 other countries, has launched a new initiative called “Resale Impact Calculator of value ‘in early 2021. This is a program to help visualize the amount contributed to reducing their company’s environmental footprint, and it revealed that the flow of luxury goods through Valuence Holdings has helped to reduce 3.47 million tonnes of CO2 emissions per year. Valuence Holdings believes that visualizing the contribution to the environment could add additional value as customers sell their luxury items, which should inspire more individuals to participate in the circular economy with luxury products.
Developing a premium and luxury sales experience is essential for developing circularity within the industry. COVID-19 has brought a new awareness to the luxury landscape that goes far beyond simply compensating for a company’s negative impact on people and the planet, as consumers increasingly seek brands morally aligned. As a result, the definition of sustainability evolves beyond ethical references and environmental concerns, and more towards goal than 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.