luxury beauty brands - sustainability is good for business

Preventing the erosion of your luxury beauty brand’s identity:

Embracing sustainability is good for business

Luxury products can appear inherently wasteful, seeming to have little specific use beyond

flaunting wealth and privilege. When sustainability and concern for the environment are seen

as critically important, surely it’s time to scale back luxury expenditure?

This view is both simplistic and misguided as in reality luxury products are made with longevity

in mind. The WPP report Sustainability and Luxury explains that “Luxury brands encourage

repairability ... and longevity of their products ... promote respect for and appropriate

compensation of craftsmanship ... and serve as sustainable trendsetters.” 1

Luxury products are expensive largely on account of the materials used and the time and

craftsmanship deployed. Cheap items are produced to be used briefly and then discarded. In

contrast, luxury items are produced by the best craftsmen, passionate about their skills and

their ability to make products whose style and beauty brings consumers both pleasure and

pride in ownership. An Hermès bag isn’t a throwaway item. A beauty consumable, perhaps a

Chanel fragrance, is bought to bring pleasure and perhaps show sophisticated taste and as

such is treasured.

As professor Jean-Noël Kapferer remarks “…luxury is at its essence very close to sustainable

preoccupations because it is nourished by rarity and beauty and thus has an interest in

preserving them.”2 and as Nicola Jenkin comments in The Ethical Fashion Source Intelligence,

“many of the attributes of luxury align comfortably with ... sustainability.”3

SUSTAINABILITY

Capacity to endure

Reduced impact on planet

Basic quality of life

Stewardship

Long-lived eco-systems

Ethical consumerism

Innovations to reduce consumption

LUXURY

Long-lasting

Superior quallity

Exclusivity

Heritage

Craftsmanship

Consumers worldwide are becoming more concerned about environmental issues. This creates an opportunity for luxury beauty brands to respond.

Authenticity

Provenance

Purity

Innovative

Ethical Fashion Forum, Sustainable luxury fashion – is it possible? Nicola Jenkin


Luxury brands also have a responsibility to focus on sustainability, as without this, they risk

losing consumer trust. As the WFF-UK Deeper Luxury Report of November 2007 explains

“These consumers use luxury products as a symbol of success [but] many successful people

now want the brands they use to reflect their concerns and aspirations for a better world.”4

This means that luxury brands now have both the opportunity but also the responsibility

to act as thought leaders, impressing consumers with their commitment to sustainable

practice. This is not only the right course of action for ethical reasons, but it also makes good

business sense because it resonates with the concerns of consumers of luxury products.

Aligning a brand’s ethos with what consumers increasingly see as important and thereby

seeking to influence wider consumer aspiration and behaviour will in turn generate interest

and loyalty, and hence sales.

Focusing on sustainability

Some way to go

WWF-UK Deeper Luxury report 2014

Whilst improving the sustainability of their products is a good start, if luxury beauty

brands fail to also improve the sustainability of their point-of-sale materials (POS)

and don’t have in place a clear corporate social responsibility policy, they will still risk

losing consumer trust.

The response of luxury brands has been mixed. Anthony Kleanthous, co-author

of the WFF report, says “There is a certain complacency in regard to the explosive

growth of new markets. [Luxury companies] just don’t think people are going to be

asking the questions. But there has been a paradigm shift and that is just not true.”5


Luxury beauty brands therefore have some way to go in order to align their practices with their

sustainability claims. The problem is that managing well the demands for POS materials whilst

at the same time ensuring brand integrity throughout a global network of suppliers and local

retail outlets is hard.

This problem is intensified by the number of seasonal and tactical campaigns required, and the

need to produce specialist displays. These displays and booths are often complex and need

to meet the individual and diverse demands of an extensive network of department stores

and retailers and this “greater product complexity clutters the supply pipeline, creates less

uniformity, builds more inventory and impacts load efficiency and freight costs.”6.

Unsurprisingly, these factors add greatly to costs - not just for the production of materials but

also for storage, transport, insurance and more - and so need to be carefully controlled both

in order to avoid alienating consumers and to minimise wasteful expenditure. With up to 80%

of seasonal POS discarded7, good forecasting, along with consideration given to what materials

can be recycled, is a must.

The sheer volume of POS required isn’t the only problem facing luxury beauty brands. The

high cost and carbon footprint of transporting POS worldwide together with ensuring that POS

is high quality, environmentally friendly, and produced by reliable suppliers who don’t impact

negatively on local environments or their own workforce are also important considerations.

TodsBulgariRichemontPPRSwatchTiffany & CoCoachLVMH

80

60

40

20

0

HermèsL’Oréal

C+

C+C+ C

EF

DDD

D+

Figure 3: Ranking of environmental, social and governance performance and reputation of luxury corporate groups

Deeper Luxury, Jem Bendell & Anthony Kleanthous, WWF-UK, November 2007


Applying sustainable practices

Brands therefore need to work closely with suppliers who are themselves committed to

and knowledgeable about sustainability. The better suppliers know that by advising how to

minimise POS production they will be recognised as ethical partners capable of producing

high quality POS materials, designed for repurposing and reuse, so sharing and supporting

the values of their luxury beauty brand clients.

Brands Suppliers

Materials used

Good quality

Health and safety compliant

Green products

Recyclable materials

Sustainable production

Complex displays that can be reused or

repurposed

No unethical work practices

Identify & eliminate potential hazards to

the environment

Have a positive impact on local

communities

CSR strategy

Expertise

Audit

Audit

Audit


There has been some progress. In 2004 Louis Vuitton stopped using plastic wrapping for

deliveries to their customers, an approach which reduced the company’s consumption

of plastic by some 20 tons per year.8 In 2012 LVMH developed its LIFE programme, an

approach embedding environmental factors more deeply into its management processes

and facilitating the development of environmental management tools.9 L’Oréal has made

a commitment that by 2020 all of its products will show social or environmental benefit

and that it will reduce its environmental footprint by 60% from a 2005 baseline.10

The LVMH initiative, CEDRE (Centre Environmental de Déconditionement et Recyclage

Ecologique), focuses on the recovery of waste from packaging and other processes

associated with cosmetics manufacture. In 2013 it processed around 1,600 tons of waste

and achieved an average recycling rate of 88%, duly reselling materials such as glass,

cardboard, alcohol, metal and plastics to specialist recyclers. A number of perfume and

cosmetics houses are now using this type of service. 11

The Latvian luxury cosmetics company Mádara - the name is Latvian for wild madder

- has grown rapidly by focusing on organic products with no artificial additives and

packaging these in recyclable materials such as paper produced with a very low carbon

footprint and wood certified under the Forest Stewardship Council as sustainable. Using

organic products is not new, but extending it to packaging is more recent, and is certainly

a policy endorsed by consumers. Designers such as Stella McCartney are moving in a

similar direction by offering organic skincare products and ensuring that their production

and packaging materials are sustainable.

Commitment and progress


Luxury beauty brands need to make a number of changes to put them on the path to

becoming more sustainable.

Forecasting POS requirements accurately is the first step, as often in an effort to reach

minimum order quantities and price break points, local teams end up buying too much POS,

particularly around seasonal and tactical campaigns.

This is something which can be improved greatly using a real time, dedicated platform such

as Geneus from ProProcure, to marshal all the elements needing to be considered - historic,

seasonal, minimum order quantities and so on.

Aggregating POS orders, maybe at local or regional level, also allows minimum order

quantities to be more easily achieved. This may be through the simple process of adding

together the same items or the more complex but no less important one of comparing

orders from different teams to see whether small changes can result in better aggregation

without affecting important POS requirements.

Becoming more sustainable


Accurate forecasting using a real-time platform

A

CCURATE FORECASTING

ACCURATE FORECASTING

VISIBILITY OVER SPEN

D

VIS

IBIL

ITY

OVE

R SP

END

GLOBAL TEAM LOCAL TEAMS

SUPPLIERS DISTRIBUTORS

Business intelligence - historic, seasonal & regional

POS information - minimum order quantities,

price break points, inventory

Aggregation of POS orders across

markets

Communication & co-operation between

all teams

JUNE

Further, by enabling good communication between different teams and allowing adjustments

right up to the point of placing an order the difficult task of forecasting accurately will become

easier and more efficient.

These practices will ultimately ensure the right quantities of POS are ordered, thus limiting

storage and waste.

Given the complexity of POS displays, a brand can utilise innovative engineering approaches

to produce the underlying infrastructure. This means that these displays don’t need to be

discarded but rather the fascias or other elements simply changed to give a fresh new look for

each new promotion. This approach will also reduce costs.


Some brands favour using local or regional warehouses. This approach adds cost initially,

but the benefits gained are worth considering. Regional warehouses allow rapid speed-to-

market when needed and so can help to reduce planning and deployment time, as well as

transportation cost and carbon footprint. In addition stock can more easily be moved to

another warehouse if needed elsewhere locally.

Benefits of a global warehouse• Minimise produced volume• Minimise costs• Recycle, reuse, repurpose

Local marketsPlacing seasonal and complex POS orders

Benefits of a regional warehouse• Speed to local markets• Minimise transport costs• Reduce carbon footprint

Getting the balance right between global and regional warehouses


In all this, identifying and working with reputable suppliers is critical. Suppliers need not only

to be good at producing product, but also to show corporate social responsibility and be fully

alert to sustainability. Traceability of materials and products is well established in certain areas

such as for organic produce or Fairtrade supply but is less good, although no less important,

elsewhere. As brand consultant Laura Sullivan explains, “Increasingly luxury consumers are

concerned about the provenance of every aspect of a product.”12 She cites the Kimberley

process, which seeks to make conflict diamonds unusable, as an example of success.

Supplier networks, which can be easily accessed by both suppliers and teams worldwide, are

a good solution. These give central teams complete and real-time visibility over any suppliers

added to the network and allows them to ensure they meet their CSR criteria.

The supplier network provided by ProProcure is a good example of the success of such

networks. Not only does it give brands confidence in the integrity and capability of their

suppliers, but also makes the process of placing tenders a lot easier and more efficient.


Gourmands to gourmets

The business environment is changing.

“The wealthy are increasingly concerned about environmental issues” says Ledbury Research

in a report on Europe’s luxury market.13 Green issues are cool. Gourmands are becoming

gourmets, savouring style, craftsmanship and sustainability rather than consuming mindlessly.

This means that luxury beauty brands need to become fully alert to what their consumers

want, namely a recognition of the importance of following sustainable practice as fully as

possible. This is particularly the case in respect of merchandising in general and of POS

practice in particular.

As Cara David, managing partner of YouGov, New York, comments “All of these trends

present a new consumer who is eager to purchase luxury products with a more educated

and reserved mentality. It is important for brands to cater to these traits and mature with

consumers in the post-recession economy.”14


1. Could sustainability be the future of luxury? 27 December, 2011

www.wpp.com/wpp/marketing/consumerinsights/sustainability-and-luxury/

2. Could sustainability be the future of luxury? 27 December, 2011

www.wpp.com/wpp/marketing/consumerinsights/sustainability-and-luxury/

3. Sustainable luxury fashion – is it possible?, 17 September, 2012

www.source.ethicalfashionforum.com/article/sustainable-luxury-fashion-is-it-possible

4. Deeper Luxury, Jem Bendell & Anthony Kleanthous, WWF-UK, November 2007

www.wwf.org.uk/deeperluxury/report.html



6. Snapshot: Cosmetics and Skin Care, January 2010

www.inboundlogistics.com/cms/article/snapshot-cosmetics-and-skin-care/

7. ProProcure luxury beauty brand research, May 2015

www.proprocure.co.uk

8. Sustainability – Deeper Luxury, April 29, 2015

www.herringbonemag.com/#!SUSTAINABILITY-Deeper Luxury/

c1kod/5541312e0cf2adc1acfbd89f

9. LVMH Commitments, Environment , 2015

www.lvmh.com/group/lvmh-commitments/environment

10. L’Oréal announces ambitious sustainability commitment for 2020, Jennifer Elks, October

23, 2013

www.sustainablebrands.com/news_and_views/communications/jennifer-elks/loreal-

announces-sharing-beauty-all-its-new-sustainabili

11. Le plateforme de recyclage CEDRE, 2015

www.lvmh.fr/groupe/engagements/environnement/la-plateforme-de-recyclage-cedre

References


12. Luxury sector goes vertical, Simon Brooke, August 12, 2014

www.supplymanagement.com/analysis/features/2014/luxury-sector-goes-vertical



14. 4 trends dominate affluent purchasing post-recession claims YouGov exec, May 2015

www.luxurydaily.com/trends-dominate-affluent-purchasing-post-recession-yougov-exec/


ProProcure tackles the lack of co-operation that commonly exists between procurement

and marketing in global and multi-national companies.

Technology is at the heart of the business. Geneus, the marketing spend management

platform is built to seamlessly integrate with existing business systems and successfully

manages client’s POS complexity giving complete visibility over costs, providing an

unrivalled aggregation solution and ensuring brand compliancy.

For the last 14 years, ProProcure has worked with a number of luxury brands, including

Perrier-Jouët, Mumm, and Martell.

About ProProcure


ProProcure LimitedEuropa Court, Marsham Way, Gerrards Cross, Buckinghamshire. SL9 8BQ United Kingdom

+44 (0) 870 380 1717 | [email protected]

If you wish to discuss the contents of this paper or to find out more about ProProcure, please call Edwige Riou on +44 (0) 870 123 5143 or email [email protected]

For Further Information

luxury beauty brands - sustainability is good for business

Documents