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[SCP] Research: How to Position a Luxury Brand as Sustainable

October 29, 2021

[SCP] Research: How to Position a Luxury Brand as Sustainable

Harvard Business Review, 08 September 2021
By: Gwarlann de Kerviler, Elodie Gentina, Nico Heuvinck

With a growing demand for companies to produce products that meet high ESG standards, luxury goods companies need to find a way to present their products as something other than markers of wealth and social status, all while preserving these cachets. This article argues that they can best square this circle by focusing on authenticity through their commitment to the craftsmanship and art of their employees in their customer engagement. The authors present French luxury goods company Hermès as a case in point.
A 2018 global survey by Accenture Strategy of 30,000 consumers in 35 countries indicated that nearly two-thirds of them (62%) find brands with high ethical values attractive. That’s potentially a problem for companies in the luxury sector, because people often see luxury goods as a wasteful self-indulgence and potentially damaging to the environment, especially if they are highly engineered or decorative.
Traditional approaches to improving a company’s ethical positioning — for instance, by adopting fair labor practices and using recycled or organic materials — may not work well for luxury brands. To begin with, marketers need to be careful to send the right signals on being eco-friendly to avoid customers interpreting sustainability messages as greenwashing. Also, past research suggests that consumers may negatively evaluate luxury brands that engage in corporate social responsibility (CSR). Other studies argue that consumers may even perceive that eco-friendly luxury products carry less status-increasing social capital than non-sustainable luxury products do. What’s more, focusing on the environment does not give luxury brands much room to differentiate themselves from non-luxury brands, which have long been active in sustainability.
We suggest a more intriguing strategy: focus on authenticity. We build our recommendation from our recent research, conducted among more than 1,900 customers for different high-end product categories (watches, perfumes and design furniture), that gives insights on how and why luxury brands can use authenticity to communicate their ethics.
Let’s begin by looking at how brands can signal authenticity before digging deeper into the results of our studies.

The Two Types of Authenticity
Consumers perceive brand and product authenticity in two ways: it is authentic if it can claim to be the “original real thing” or if it corresponds to a “genuine ideal.” This gives two sets of cues that marketers can use to signal authenticity: indexical and iconic.
Indexical cues of authenticity. Here, marketers signal a product’s authenticity by establishing direct connections with its origins and makers. The fact that a piece of luxury furniture was designed by an Italian artist, produced by local artisans in an Italian village, and made of Italian wood and silk indicate that a it is truly an authentic Italian product. Here, the perception of authenticity is based on objective information (such as certificates of origin or the nationality of the designer).Iconic cues of authenticity. In this form, the product is a reproduction or a re-edited version of a past product — a new product whose design is based on the maker’s subjective perception of the original’s defining characteristics. In other words, if your Italian furniture maker opens a branch in France, with designers and producers inspired by the creative vision of the Italian team, the products of this branch could be perceived as authentic if key elements of the marketing mix evoked the original product — for example, if the shape, color, or materials of the products in France resembled those of the original Italian products.
In our first two studies, with almost 500 consumers in the US, we showed how the two types of cues affected perceptions of whether the product was considered as ethical. Respondents were confronted with a designer chair or high-end perfume that was either described as being the first original edition and came with an official certificate of origin (indexical cue) or described as a second edition by the same brand that paid tribute, was inspired by the first original version, and came with an official brand booklet (iconic cue).
The feedback showed that when a brand communicates a message on its authenticity with indexical cues, consumers perceive the brand as being more ethical than when it relied on iconic cues. This difference cannot be ascribed to the “intensity” of perceived authenticity because we also found that the two messages did not differ in the level of authenticity they evoked: iconic products were seen as just as authentic as indexically cued ones. So, why are products using indexical cues seen as more ethical?

It’s All About Passion
To answer that question, we conducted additional studies for our research, with more than 700 consumers, in the context of high-end perfume once again. We found that respondents perceived products with indexical cues of authenticity (original versions) as made with more effort and care than the products using iconic cues (authentic reproduction). This was because original versions, by definition, are new and different, which means that more creative investment must have gone into them. It was this perception, of putting more efforts and love, we suspected, that contributed to the sense that these products were more ethical than iconically authentic products.
To confirm this hypothesis, we ran another study, again with more than 700 consumers, in which we included strong signals that our iconic product had required as much care through creativity, design, and craftsmanship as its indexical counterpart — by, for example, highlighting the number of years taken developing the iconic product and the number of design ideas submitted and reviewed even for the second series. When these signals were included, ethical perceptions of iconically authentic products turned out to be about the same as for indexically authentic products. Thus, there was a clear link between how much effort and love the manufacturer was seen to put into the product and how likely consumers were to perceive it as ethical.

So What Should Marketers Do?
Giorgio Armani once observed that luxury brands should get back to the value of authenticity. Our findings seem to confirm his insight. A case in point is the luxury brand Hermès, one of a handful that have enhanced people’s ethical perceptions of the brand. They did this by shifting from classic marketing approaches to adopt a strategy focused on authenticity. The key is to have real people making the link between the past and the present, with an artistic eye.
The human touch. Many luxury brands already link to their origins, as their manufacturing is often based close to where they came from. They also retain artisanal manufacturing processes, with products handcrafted by dedicated, expert artist-craftsmen, motivated by an intrinsic desire to create the best product. But Hermès goes further than most. Every year, for example, it organizes a public event, “Hermès Beyond the Walls,” to celebrate the passion of the artisans behind their products, showcasing both their original creations and those inspired by their classics. During the event, Hermès artisans handcraft unique pieces in real time in front of visitors, explaining how they work and answering questions. This makes it very clear that making each product requires many different steps and hours of precision manual. Hermès creative director, Pierre-Alexis Dumas, observes that customers who attend the event come away with a deep relationship with the product: “[they feel] the presence of the person who crafted the object.”
Forward-looking continuity. Most luxury goods manufacturers will emphasize tradition — Swiss watchmaker Patek Philippe, for example, presents its products as tomorrow’s heirlooms. This communication works better, however, when it focuses on how today’s craftsman are part of a long tradition of craftsmanship. Emphasizing a brand’s closeness to its historic roots — for instance, the fact that it may employ several generations of craftsman from the same families — demonstrate the commitment of both today’s workers and their employers to the traditions of their craft.
But it’s also important not to get caught in the past. The best luxury goods companies understand that they cannot live off or simply re-make their classic products forever; they risk losing connection with the creation and love that went into those products and will come to be seen as exploitative — and in the end maybe less ethical. At Hermès, traditions are kept relevant and linked to passion through frequent collaborations with contemporary creators and designers and even customers. For example, Laurent Goblet, a saddler at Hermès for forty years, worked closely with German dressage champion Jessica von Bredow-Werndl in designing the famous Arpège saddle. Hermès also drew on the skills of its traditional glassmakers to produce watches with diamond indexes embedded in sapphire crystal, which appear to hover above the inner workings. This was a pioneering move in watchmaking and involved the application of traditional skills to achieve a modern design.
Dedication to the artistic community. Above and beyond the design and manufacture of its own products, luxury goods firms can show passion and care to raise their ethical profile by supporting the development of a broader community of artists. A good example is provided by the Hermès Corporate Foundation, which offers residencies to artists. This gives them the opportunity to work with Hermès craftworkers and designers to explore social themes from multiple perspectives and create art works using the materials used for Hermès products (such as wood, silk, paper, crystal and leather). For example, Bianca Argimon, a Belgian artist in residence at the Hermès textile holding company in the Lyon region, was interested in printing on silk muslin, a material that is particularly delicate. With support from the Hermès Foundation, she produced a silk print describing the excesses of consumer society, inspired by a famous painting of Hieronymus Bosch.
Hermès received a high ranking on the CSRHUB Consensus ESG Ratings of 89%, which could be linked to the brand capacity to take advantage of important authenticity cues. In addition, we carried an additional ad hoc study in the U.S., in which Mturk respondents were asked to compare Hermès and its main high fashion competitors (including Chanel, Dior, Prada, Burberry, and Louis Vuitton) on measures of ethical commitment. Findings show that most respondents perceived Hermès as a distinctly more ethical brand than its rivals.
The bottom line is this: if luxury retailers are to win a reputation for ethics, they need to do more than just green their products and operations. They need to communicate the passion and commitment of their people to their art. A company’s customers must be made aware of how much care and feeling has been embedded into the lengthy and complex manufacturing process that goes into each and every luxury product or service that the company supplies.

Learn more at Harvard Business Review

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