Making sens of these turbulent times

Sustainability and Luxury

A not very interesting article on a subject though very interesting, at Havas Media Lab’s blog today.

Nevertheless, something deserves to be highlighted.

Kavita Maharaj, back from the IHT’s “Sustainable Luxury” conference held at New Delhi on March 24th and 25th 2009, explains.

“In addition to high levels of engagement with traditional luxury brand drivers like heritage and quality, consumers in emerging markets are increasingly showing extremely high levels of engagement with other issues, for example, the area of sustainability. Retailers that move quickly to capitalise on this, will be more adept at building greater brand equity and thus greater commercial succcess, both in the medium and long term”.

Ok, it’s not a scoop. But around one year ago, i read this article by Dana Thomas (author of “Deluxe: How Luxury Lost Its Luster”), in The New York Times.

“For more than a century, the luxury fashion business was made up of small family companies that produced beautiful items of the finest materials. It was a niche business for a niche clientele. But in the late 1980s, business tycoons began to buy up these companies and turn them into billion-dollar global brands producing millions of logo-covered items for the middle market. The executives labeled this rollout the “democratization” of luxury, which is now a $157-billion-a-year industry.

To help these newly titanic brands retain an air of old-world luxury, marketing executives played up the companies’ heritage and claimed that the items were still made in Europe by hand — like Geppetto hammering in his workshop by candlelight. But this sort of labor is wildly expensive, the executives routinely explain, which is why the retail prices for luxury goods keep going up and up.

In fact, many luxury-brand items today are made on assembly lines in developing nations, where labor is vastly cheaper. I saw this firsthand when I visited a leather-goods factory in China, where women 18 to 26 years old earn $120 a month sewing and gluing together luxury-brand leather handbags, knapsacks, wallets and toiletry cases. One bag I watched them put together — for a brand whose owners insist is manufactured only in Italy — cost $120 apiece to produce. That evening, I saw the same bag at a Hong Kong department store with a price tag of $1,200 — a typical markup”.

It would be very cool if some luxury brands could be a little bit more coherent (fortunately some does).

By the way, if you want good thoughts on this topic, visit the excellent John Grant’s blog, Green Normal.