Marking the release of Mazars’ new report on how the luxury business model is being made over, we speak to Comité Colbert CEO Bénédicte Epinay about the resilience of the luxury industry, the importance of Gen Y and Z to its future, and how sustainability is taking centre stage.
How have luxury customers' expectations of luxury brands and products changed in recent years?
Let us recall that an urge to create and possess beautiful things has always existed. History shows mankind has a craving for beauty: to make life meaningful and to celebrate it. Owning luxury items answers a dual need, the need for ‘safe haven assets’ in times of uncertainty and the need to assert status within society. Wars and crises have so far failed to wipe out these deeply rooted needs.
These past few years have seen the rise of several important trends: the personalisation of luxury items facilitated by newly acquired data and easy digital access, as well as the social and environmental responsibilities of companies demanded by customers when it comes to transparency, traceability and ethics.
Has the health crisis opened a new chapter for the luxury industry?
The crisis has led to two major shifts. The first is rather short-term and involves the nature of the products bought. A glaring example is the fall in high-end lipstick sales and the meteoric rise in mascara sales caused by the mandatory wearing of masks.
People will no doubt recover their make-up routine once we can travel without wearing a mask again. As a further example, we see how lockdown has led people to invest in their home and health. So, these two trends will probably serve as guidance for luxury in the new normal.
The second shift is structural and deals with the rise of digital distribution. E-commerce took off in such a way that it now accounts for around 10% of luxury sales; turning back the clock seems highly seems unthinkable. All the more so since luxury market growth is based for three quarters on new consumers and since 85% of them belong to generations Y and Z, who are highly capable when it comes to all things digital.
By 2025, generations Y and Z, who grew up following influencers, are estimated to represent 50% of luxury consumers. In this regard, the Colbert Labo, a focus group gathering roughly 50 young collaborators from our member Maisons, just presented the results of their work around the theme “How to support environmental responsibility within a luxury Maison.” These young people, luxury lovers and consumers, command our attention on the necessity for exemplary action when it comes to environmental responsibility in the luxury industry. It is worth noting all their proposals are digital and revolve around transparency and new experiences.
Finally, I might add that the founding values of luxury - the long-term, the rarity and the culture of beauty - resurface today as a result of the pandemic, as if our time was catching up with us.
Luxury is resilient, for two reasons at least. Firstly, reinvention comes out of necessity. And luxury has mastered the art of questioning itself season after season, year after year, be it high-fashion or vinery, no matter what obstacles appear on its path. The second reason for this incredible resilience is that some markets, like China, are first-acquisition markets. Hence our Maisons’ enormous potential in that part of the world. Lastly, the crisis does not majorly affect the core of our industry: its history, values, products nor consumer motivations. Nevertheless, it questions our way of selling and sourcing our raw materials, of manufacturing locally and sustainably, and in what quantities. Nothing new for our Maisons though, they have been aware of these issues long before the pandemic occurred!
What are the most important immediate challenges for the French luxury industry?
There are numerous challenges. Firstly, the rise of mainland China in luxury purchases. Chinese consumers have become the bread and butter of our brands’ strategies in France but also locally in their countries. Since March 2020, many of our brands have recorded sales growth in China of over 50%. Many of them have even recorded three-figure increases. The increase of Chinese consumer spending clearly calls into question the future role of Europe in brand strategies.
Secondly, the rise of local consumption. The business of luxury is structurally becoming more local in nature. Our brands know that if they work well with their local consumers, it will enable them to offset the loss of travel retail at the very time when the fear of travelling could have a lasting impact on activities. So, they try to now have an overall approach because the fear factor of travelling is likely to impact tourism in Europe for some time. Tourism represents two thirds of the luxury business, so brands have to concentrate on the remaining third - local consumers. One of the consequences is that, as I said earlier, brands will have to probably think about optimising their bricks and mortar network.
And thirdly, the rising importance of CSR. In a world where natural resources are decreasing, sustainability and ecology are the future drivers of the luxury industry. We have a role to play in this and we know that quality only exists if it includes respect for ecological concern. At the Comité Colbert we plan to be at the forefront of social and ecological transformation.
Do you think the crisis will lead brands to take up the CSR issue more than ever?
Yes, but they started tackling the subject long before the pandemic. At the Comité Colbert, we saw the rising importance of CSR within our companies as soon as the early 2000s. Incidentally, that’s when we created, in partnership with Vitaly, a CSR values framework for French luxury to serve as good practices to share. The document gathers all CSR initiatives taken by our 83 Maisons. We have so far identified 350 initiatives, much of which relate to resource sustainability and contributing to the fight against global-warming and promoting and maintaining know-how. In 1987, the Brundtland Report put forward a definition of sustainable development that’s still a point of reference for us, “[a] development which meets the needs of current generations without compromising the ability of future generations to meet their own needs.” That’s exactly what the luxury industry has been doing for years.
Will the crisis change how consumers pass on luxury?
Luxury is no longer passed on how it was 30 or 40 years ago, but this evolution has nothing to do with the pandemic. We indeed moved on from a familial vertical transmission – parent to child – to a horizontal transmission between friends, peer groups and collaborators within the same company. What does that mean for luxury brands? The work of acculturation once conducted by the older person is no longer provided. Hence a huge need for narratives and storytelling for the Maisons to reach younger consumers. The challenge is particularly important in China where young customers often don’t know much about the history of our Maisons, except for what they discover through social media.
What’s the key to getting luxury through this crisis?
Innovation as always! Every time the world has faced a crisis, the luxury industry’s always known how to seize innovations to proudly pull through. Blockchain technology, for instance, provides answers to our era’s wariness and need for transparency and authenticity. In France, LVMH, Microsoft and Consensys joined forces to create Aura, a platform which aims to serve the luxury industry by offering a monitoring and tracking service for its products. Several brands of the Comité Colbert, including LVMH, Louis Vuitton and Parfums Christian Dior are currently involved. Further talks are underway to include other brands from the group as well as other luxury groups in the world. Another consortium, Arianee, offers to deliver a digital passport to luxury items, thereby conferring proofs of authenticity and traceability – and has already won over Richemont.
Thanks to data, many French luxury companies allow, after the example of Louis Vuitton, their in-store sellers, which are without tourist clientele, to sell online to their customers, thereby multiplying tenfold the possibilities of brands to sell digitally.
In China, the surge in livestreaming and interactive e-commerce, which relies on experiences, is interesting to observe as it paves the way for a new alternative to commercial websites, while also promoting local activity.
Who might be the face of the future of luxury: an actor, an influencer, an artist, an activist, or another?
An artisan no doubt! In France, luxury Maisons revolve around the amazing craftmanship and know-how of artisans. The French luxury industry has been perpetuating French art de vivre for centuries because it managed to preserve its craftmanship and cherish its artisans like living treasures. This is neither a romantic figure of speech nor a hint of nostalgia.
We bring together, within the Comité Colbert, no less than 14 different fine crafts: gastronomy, jewelry, high fashion, perfumery, silverwork, crystal work, vinery and more. Next year in Pantin, close to Paris, Chanel will gather numerous companies in a new headquarters for craftmanship dubbed 19M. As for Hermès and Louis Vuitton, they are consistently opening new manufacturers in France, where the luxury industry employs directly and indirectly one million people. Not content to be just at the heart of our Maisons’ creative process, artisans are also the spokespeople of a fight dear to the luxury industry: that of inclusivity and diversity.
Bénédicte Epinay is CEO of the Comité Colbert, an association that promotes luxury and unites luxury brands and cultural institutions, members include Balenciaga, Chanel and Louis Vuitton. She is a contributor to the 2020 Mazars study, Conscious, collaborative, connected: making over the luxury business model.
 Houses – or Maisons in French – are luxury companies that design and manufacture under an individual label or brand. Houses can be independent businesses, or they can come together as part of luxury groups, e.g. Kering, LVMH, Richemont. In France, the term ‘haute couture’ is protected by law, with only certain fashion houses being allowed to call themselves true Maisons.