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What brands should know about the rise of ‘conscious capitalism’

New opportunities and attitudes in a post pandemic world are ushering in more conscious decision making, writes Maria Bain

Maria Bain

Head of Audience Intelligence, iCrossing UK

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Good news: consumers are looking ahead to 2022 with positivity. According to the annual Hearst Positivity survey  75% of ABC1 consumers say they have a positive outlook on life.  While over half (51%)  believe the future will be better because of the new ways of living adopted during the pandemic. There is a strong feeling that this is a moment for reflection and an opportunity for change. 78% acknowledged the importance of their mental wellbeing and 62% said they were considering ways to help others more. This sentiment will further the rise of ‘conscious capitalism’. 

Over half (57%) now say they’re more likely to purchase from brands that share their personal values. This is particularly true of younger demographics who are far more likely to consider social and environmental impact, as well as values, in their decision making. 

There is a strong feeling that this is a moment for reflection and an opportunity for change. 78% acknowledged the importance of their mental wellbeing and 62% said they were considering ways to help others more

Maria Bain, Head of Audience Intelligence, iCrossing UK

According to Morgan Stanley, Millennials are twice as likely to invest in companies that have social or environmental goals. However, the pandemic has increased the focus on conscious purchase decisions for all luxury shoppers. We believe this more conscious decision making will impact the luxury sector by accelerating three trends:

1. Sustainability 

Material waste, caused by sourcing products from far flung locations, was once deemed the essence of luxury. Luxury experiences in dining, travel and leisure still often result in excessive waste and carbon emissions. However, these practices are coming under increased scrutiny. Conspicuous symbols of wealth and success are less attractive now than in the past. The pandemic has proved an inflection point. 63% of HNWIs (High Net Worth Individuals)  say they have recycled more since the start of the pandemic, and a quarter bought more sustainable products. 

Going forward, 78% want to be more environmentally conscious. As private jet flights increased, so did the protests, with Farnborough Airport targeted on more than one occasion. Just 1% of travellers cause half of all global aviation emissions, and many have questioned the need for stars and sports teams to hire private jets given their proportional footprint. Luxury brands are well-placed to address this scrutiny; they’ve always incorporated artisanal manufacturing and careful material sourcing, as well as naturally absorbing added costs of sustainable production into pricing. 42% of younger HNWIs expect luxury brands to have clear information on products and supply chains. This should be positive news for brands that pride themselves on sourcing the best materials. A response to this pressure could be seen in S/S 21 designer runway collections, where emphasis on sustainability increased by 214% on the previous season. Recycled jerseys, nylons and denims were promoted as responsibly-sourced fabrics, with Balenciaga using 93.5% certified sustainable and upcycled materials across its entire collection. We can expect ultra-sustainable products that are still made from the finest materials and priced at a premium to become luxury, as consumers reflect their personal values in purchases. 

2. Brand Responsibility 

Covid brought greater awareness to how an individual’s contribution can make a difference to a greater goal. Consumers increasingly want to know: if I buy this product, am I doing a good or bad thing for the world? They want to understand brands’ attitudes towards workers, fair wages, local production, charitable giving, disadvantaged people and many other things. Half of HNWIs say that knowing a brand has sub-standard labour conditions would impact their purchase decision. 

Luxury buyers are striving to add good into their consumption, and 57% say their purchasing decisions are influenced by a company’s ethical and sustainability credentials. 86% think that brands should take a stand on social issues and the pandemic proved an opportunity for this – 54% of those asked could specify brands they saw support the fight against Covid. Yet again, luxury brands should be well placed to address these concerns. With less pressure on cost and greater focus on provenance of materials, luxury brands should have a strong narrative. However, if high price purely means high mark-up, those brands will be exposed. 

3. Second-hand Luxury

No matter what it’s called – resale, re-commerce, luxury consignment or pre-loved – the secondhand luxury market saw a 65% increase between 2017 and 2021, versus 12% growth in first-hand luxury over the same period . With scrutiny around waste and a younger consumer with different perceptions of luxury, we expect the pandemic to have accelerated this trend further.

According to online resale platform Vestiaire Collective, its sales more than doubled in 2020. Indeed, 48% of HNWIs under age 35 say they buy more second-hand fashion items now than a year ago. The growing HENRY audience and more diverse HNWIs not only have different perceptions of what defines luxury, but also a growing demand for high-end fashion accessories at lower prices. Secondly, increased working from home has grown second-hand markets in personal luxury, as fewer opportunities to go out meant people are unwilling to invest in higher priced items. 

Traditional resale markets, such as alcohol and art, are growing as people invest in their homes. The price of collectable handbags rose 17%, and the value of fine wines grew 13% in 2020. Sotheby’s (Knight Frank) saw a 97% sell-through rate at its pre-loved jewellery auction. The secondary resale trainer market is estimated to grow from $10 billion today to nearly $30 billion by 2030 and the auction record for trainers has been broken multiple times since 2017, jumping from a little over $190,000 to the $1.8 million paid in 2021 for the prototype Nike x Yeezys Kanye West wore to the 2008 Grammys. Finally, the rise of resales reflects perception change and thriftiness from luxury consumers, but also the ambition for more sustainable consumption. Brands are responding; both Burberry and Gucci have created marketing arrangements with second-hand seller The RealReal, and Arc’teryx launched ‘ReBird’, an ecommerce platform featuring both its Used Gear Program as well as upcycled clothing and repair services. And luxury fashion e-rental business HURR Collective even went physical, partnering with Selfridges on an in-store pop up. Since the launch in February 2020, the brand has seen memberships grow by 850%. 

This is an extract from icrossing’s insight report The evolution of the luxury consumer: post pandemic. To download the full insight report click here. 

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