The Devil Wears…Vegan Leather
The Luxury Industry is a world of elegance and allure, where exclusivity meets artistry, and where excellence is not just seen, but felt in every detail. The industry is defined by a collection of iconic brands like Louis Vuitton, Christian Dior, and Coco Chanel. These luxury houses, amongst others, have consistently set the standard in captivating consumer attention by merging artisanal heritage with an innovative flair. Historically, the luxury industry has evolved through expert craftsmanship and creative design, however, in the current market, the theme is shifting as sustainability is having an increased influence in the direction of brands. Designers are experimenting with eco-friendly materials such as vegan leathers; supply chains and raw material processes are being re-examined; and business models are shifting from traditional production to more sustainable strategies. Today, the luxury industry stands at a pivotal crossroads where timeless design meets an urgent call for innovation and responsibility. Top groups like L’Oreal, Kering, and LVMH are leading the way in sustainability efforts by pledging carbon neutrality, circular business models, and responsible sourcing. The modern luxury industry is embracing a new era—one where luxury and sustainability harmoniously coexist—redefining what it means to create, consume, and cherish.
The current shift toward a more sustainable business model in the luxury industry serves as an essential step forward to strengthen both internal brand longevity and external brand appeal. From an external perspective, a more sustainable business model serves as a distinctive selling point to attract a new and younger consumer. A 2023 McKinsey and Company report highlights that consumers care about environmentally responsible products and are willing to spend more on products with such claims. The study finds that products making environmental, social, governance (ESG) related claims averaged 28 percent cumulative growth and enjoyed 32 to 34 percent repeat rates (meaning buyers purchase products from the brand three or more times annually) over the past 5 years. In contrast, brands that generate less than half of their sales from ESG-related products only averaged 20 percent cumulative growth and achieved repeat rates under 30 percent over the past 5 years (McKinsey 2023). Furthermore, eco-conscious consumer choices are being spearheaded by younger generations, specifically Gen Z and millennials, as 70% of them find sustainability to be more important than brand names when making a purchase (Wood 2022). Appealing to the younger generations’ preferences has become increasingly important in the luxury sector as young consumers are contributing to a growing percentage of brands’ sales. In 2018, the Union Bank of Switzerland (UBS) published a report which estimates that in 2017, 65 percent of all Yves Saint Laurent revenue came from millennials, 50 percent of all Gucci’s sales were from millennials, and 33 percent of Louis Vuitton’s profits came from consumers aged 21-37 (Elven 2018). Overall, UBS estimates that in 2017, millennials drove 85 percent of the luxury sector's total growth and by 2025, the same age group will represent 45 percent of total high-end spending (Bloomberg 2018). Overall, sustainability is a selling point luxury brands can capitalize on to attract a current and growing key consumer.
Shifting to more sustainable practices is not simply a marketing ploy; from an internal perspective luxury beauty and fashion brands are reliant on scarce, high quality raw materials that are often from unique geographical ranges (Kering 2015). Kering, a French holding company that owns Yves Saint Laurent, Gucci, and Balenciaga, did a study in 2015 about the impact climate change may have on their six key raw fashion materials: cotton, beef leather, sheep/lamb leather, vicuna, cashmere, and silk (Kering 2015). Vicuna, for example, is considered to be the most expensive animal fiber in the world and used to create warm garments or blends for luxury fabrics (Kering 2015). Vicunas, however, are an incredibly unique species and are only found in Chile, Peru, Bolivia, Ecuador, and Argentina at elevations of 3,500 to 5,200 meters above sea level. Unfortunately, Kering’s report highlights that much of vicuna territory is considered at high risk for climate events, primarily drought. The US Federal Archive reports that drought is the environmental variable that has the greatest impact on recovering vicuña populations after a 1996-1998 drought reduced the vicuna population of the Jujuy Province, Argentina from 6,500 to 4,800 (Federal Register 2002). These environmental consequences are not unique to vicuna. Kering’s report concluded that for each of their 6 key materials, both the availability and quality will be impacted as a result of climate change, and these effects will become increasingly detrimental as climate events become more prevalent.
Beyond fashion, the luxury beauty industry is also seriously threatened by climate change due to its heavy reliance on water. The Natural and Organic Cosmetic Association reports that most beauty products are often 60-85 percent water (Claudio 2024), however, freshwater supplies are being put under increased stress due human and climate factors such as population growth and climate change (Ellerbeck 2022). While agriculture is most responsible for freshwater depletion at 70 percent of global water withdrawal, research by Barclays reports that all of the consumer staples sector (Beauty, Food, Drink, & Household Products) is vulnerable to water scarcity and faces a potential $200 billion loss from water shortage (Meredith 2021). As a result, luxury beauty brands are innovating away from their unanimous key raw material, shifting brands away from their historically perfected formulas to now reimagine how a beauty product should be made, packaged, and consumed.
While it is clear the luxury industry must change for both consumer appeal and future supply shortcomings, one of the biggest challenges luxury brands face today is how to appropriately manage supply and demand while upholding exclusivity. Historically, luxury companies control supply and demand by creating a set amount of product, gauging market demand, and disposing of any surplus product so as to not saturate the market. This can be seen by brands such as Burberry, who destroyed more than £90 million of goods from 2013-2018, and Richemont, who repurchased £430 million of watches between 2016-2018 (BBC 2018). From an economic perspective this business model makes little sense as a company should only produce a product if the cost of production is less than or equal to the willingness of the consumer to pay, and, when a company makes more supply than needed a discount would allow them to reach the desired equilibrium price (Kanter 2024). While this is economically rational, luxury brands do not abide by these principles due to the prestige their products hold. Brands would rather incinerate, repurchase, or momentarily incur a loss on their products than have it sold at a discount or replicated because this would permanently tarnish the brands reputation (Kanter 2024). When comparing the cost of inputs to the gross margin for a good, a 2023 Financial Times article determined that a $2,500 Yves Saint Laurent bag could not have cost more than $250 to make (Biondi 2023). Thus, it is clearly advantageous for luxury brands to overproduce and absorb the loss of incineration than tarnish the brands prestige. However, due to consumer concern about these wasteful environmental practices, luxury companies are creatively evolving their business practices in ways that mitigate their waste while upholding their prestige.
English fashion designer Stella McCartney, who founded her eponymous brand in 2001, has been a pioneer in sustainable luxury for decades and her brand has recently propelled into the luxury spotlight due to its acquisition by LVMH in 2022. McCartney was one of the first to introduce animal leather and fur alternatives with their Falabella bag in 2009, utilizing grapes, apples, recyclable plant-based alternatives, and second life ocean plastics in its design (McCartney 2024). The brand prides itself on its vegan heritage and pro-environmental position, marketing both through slogans, partnerships, and fashion collections. Recently, McCartney’s brand collaborated with PETA (People for the Ethical Treatment of Animals) for its 2024 winter collection by reigniting PETA’s historic “I’d Rather Go Naked than Wear Fur” campaign; however, McCartney’s brand more bluntly announced to the world, “It’s About F****** Time to End Leather” (McCartney 2024). Expectedly, the 2024 winter collection was crafted from 90% responsible material including bio based vegan crocodile skin produced by apple waste, and has abstained from using any leather, feathers, fur, or animal skins (McCartney 2024). Overall, the brand has been a modern champion of putting sustainable materials at the forefront of all they produce.
Additionally, up-in-coming French luxury brand MasionCleo has begun to embrace a transparent, made-to-order business model. This model only makes products once they have been ordered and to the appropriate specifications of the client. As a result, there is no product that does not have a direct consumer, thereby mitigating any potential overproduction and minimizing wasted resources. Further, MaisonCleo prides itself on only using leftover fabrics from other French couture houses for its clothing, thus mitigating waste and emissions from shipping intermediate goods (MaisonCleo n.d). Finally, MaisonCleo is fully transparent, consumers can discover everything from how much the fabrics cost to how much time was spent on their individual garment (MaisonCleo n.d). However, scalability and convenience are some drawbacks to this model. Given that each piece is ordered, then the fabric is procured and seamstress assigned, it will never be possible for same or next day delivery. In fact, MaisonCleo has an expected arrival time of 3 weeks after the order is placed. An additional drawback of the made-to-order model can be described by Olivia Rose, primary seamstress of made-to-order luxury brand Olivia Rose the Label. She writes that because it is only her creating clothing, she can only handle so many orders at a time and thus must turn away clients (Cunningham 2019). As a result, made-to-order luxury brands often handle bridal or evening attire as demand is relatively controlled and consistent. However, this narrative is not fixed as ready-to-wear streetwear brands such as S’envolver are growing in popularity as young consumers' willingness to pay and wait for clothing that is sustainable and unique is growing.
Finally, similar to MasionCleo’s made-to-order products, luxury skincare brand Prose is a customizable beauty-tech company whose unique sustainable business strategy marries a tech-driven approach with apothecary-style products. The unique Prose experience begins with a lengthy survey, either skincare or haircare oriented, which is then used to create a unique formula based on each consumers’ profile utilizing 185+ responsibly sourced ingredients (Prose n.d). Similar to MaisonCleo, Prose does not create a product prior to the consumer completing their survey, creating their unique formula, and ordering the goods—only once that process is completed the production and shipping of that product begins. However, unlike MaisonCleo, this made-to-order model can be considered more compatible with the beauty industry given that product creation, shipment, and arrival merely takes 7 days (Prose n.d). Further, purchases happen more frequently in beauty compared to fashion, therefore, the upfront effort to make a unique formula for each individual consumer is not lost on one product but has high potential to result in several purchases throughout the year. Additionally, Prose has designed a seamless way to scale its brand through effortless repeat purchasing. Once a consumer completes the survey and places an order, they are encouraged to subscribe for automatic reorders, benefiting from both convenience and cost savings. This subscription model eliminates the need to retake the survey while offering a discount on future purchases. By combining a made-to-order approach with repeat purchasing incentives, Prose minimizes waste, enhances customization, and streamlines the order fulfillment process.
In summary, the Luxury Industry is at a necessary inflection point due to mounting climate risks. As brands embrace eco-conscious materials, ethical production, and innovative business models, they are not only preserving their heritage but also protecting their future. The Luxury Industry’s ability to merge artistry with responsibility will ultimately determine its success in a world where consumers demand both beauty and sustainability. Luxury brands have the opportunity to lead by example, proving that true luxury is not only about indulgence but also about impact.
References
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