The Future of the Luxury Industry and Sustainability

Explore practical steps luxury brands can take to become more sustainable

March 1, 2022

Of all different fashion sectors, the luxury industry seems to have the natural makings that are most in line with sustainable business models.

In fast fashion, items are cheaply made, and garments often become worn and unwearable after just a few uses. Luxury items, however, are made to last. Even if they’re in style for a particular season, the majority of buyers are making luxury purchases with the intent to use garments and accessories for years and years. They’re investments.

And when they do become worn or outgrown — whether in terms of size or a consumer’s personal style — luxury items are typically:

  • Repaired
  • Refurbished
  • Sold on a secondary market

Where the Luxury Industry Falls Short With Sustainability

While the luxury industry seems to have all the makings of a sustainable business, companies often fall short in terms of circularity and environmental, social, and governance (ESG) principles.

Items are certainly made to last longer, but brands may not be as focused on or transparent about key sustainability performance factors (KPIs), including:

  • Carbon emissions
  • Water waste
  • Product and materials waste
  • Recycling rates
  • Energy use
  • Environmental impact
  • Supplier, manufacturer, and other partner KPIs
  • And more

A report from UBS Investment Insights shows that millennials are set to make up 45% of luxury goods purchases by 2025. By 2035, Gen Z will make up 40% of the same market, a report from Bain and Company and Farfetch found.

These two demographics, set to account for a majority of the luxury goods market in the coming years, are increasingly putting pressure on brands to be more sustainable.

A joint State of Fashion 2021 report from Business of Fashion and McKinsey found that nine out of 10 Gen Z consumers “believe brands should detail their stances on environmental and social issues.” In another survey, 61% of luxury goods respondents said that knowing a brand cares about sustainability could make a difference in them choosing to make a purchase, Statista reported.

How Luxury Brands Can be More Sustainable

Luxury brands can be leaders in the circular economy, helping the fashion industry contribute to less waste and educating manufacturers, partners and consumers alike.

A few steps luxury brands can take to be more sustainable include:

  • Tracking sustainability KPIs and working to improve figures: A connected` products platform like those from Blue Bite empowers brands with end-to-end traceability, tracking metrics throughout the supply chain, transport, during sales to customers, and beyond
  • Sharing sustainability best practices with farmers, manufacturers, transport services and other partners
  • Creating more sustainable fashions with season-less styles, like Pablo Erroz
  • Using sustainable packaging and finding ways to cut back on carbon emissions, water waste, etc.
  • Being transparent about metrics and how they are working to become a player in the circular economy
  • Educating consumers on how to extend the life of their items

Brands can hold themselves accountable and help consumers, partners, and manufacturers play their role in the circular economy.

Third-Party Sustainable Luxury

A number of different companies have partnered with brands and consumers in a move to not only make luxury items more accessible for the average consumer, but also make them more sustainable.

Brands can take inspiration from these models as they keep their own items in circulation and encourage consumers to do the same.

Rentable Luxury

Companies like Rent the Runway and Wear Wardrobe offer luxury clothing rentals or “borrowing” to consumers.

Rent the Runway

This company partners with designers to offer a full size run of garments that they offer for rent on their site to consumers. Rent the Runway also offers items to consumers for resale, where they can purchase them for a discount.

Rent the Runway shows how they’ve helped consumers play a role in the circular economy. 

Since joining Rent the Runway:

  • 89% of consumers say they buy fewer clothes
  • 83% of consumers say they buy less fast fashion
  • 1 in 3 consumers buy 6-20 fewer items of clothing each month

Wear Wardrobe

Headquartered in NYC, Wear Wardrobe partners with celebrities and influencers so consumers can “borrow” their clothes for a fee.

The company notes it is carbon-neutral, aims to use boxes made from recycled materials, recycles 100% of boxes after receiving products back from customers, and never uses single-use plastic.

Room for Sustainability Growth in Rentable Luxury

While luxury clothing rental companies offer a way for consumers to reduce consumption, some critics have noted that these models rely heavily on shipping — which is not the best for the planet.

Secondhand Luxury

While thrift and consignment stores are popular with many shoppers, online platforms like Depop, The Real Real and eBay give consumers a place to make luxury goods transactions. Sellers can keep their luxury items in use, and buyers can purchase goods while keeping the planet in mind.

  • Depop: Deopop notes that extending the life of a clothing garment by nine months reduces its carbon and water footprint by 20-30%. This platform features a mix of fast fashion and luxury products where buyers and sellers can make transactions.
  • The Real Real: As the first carbon-neutral resale company, The Real Real gives buyers and sellers alike an online secondhand luxury market.
  • eBay: A popular secondhand market, eBay launched an Authenticity Guarantee program with the help of Blue Bite to give buyers peace of mind when purchasing designer sneakers. The program has since expanded into handbags and watches.
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