Based on Euromonitor International’s latest research, the prospects for global luxury goods and fashion overall appear to be far more optimistic than previously expected. This is hugely impressive against a backdrop of ongoing political and economic instability, not to mention the continuing effects of the global pandemic.
Key players continue to reassess their priorities and operating environment to help them navigate these new challenges ahead and above all meet the ever-changing needs of today’s consumers.
COVID-19 pandemic has brought a global reckoning across luxury and fashion
Despite the positive outlook, recovery across all regions remains uncertain due to China’s zero- tolerance approach to COVID-19, rising interest rates and inflation, supply chain issues and the war in Ukraine, in addition to the cost of living crisis. Now more than ever, there is intense pressure on key players to adapt to new consumer lifestyles (such as remote working), a change in retail preferences (a digital-first mindset), greater importance on value propositions and the growing urgency in sustainability from both a social and environmental angle.
The pandemic has brought a global reckoning across luxury goods and fashion, as it has highlighted the plight of textile workers around the globe, and the damaging impact of human activity on the planet. In addition, the “Black Lives Matter” movement has also highlighted police brutality and inequalities. Indeed, diversity, equity and inclusion (DEI) in luxury and fashion is high on the agenda as consumer consciousness takes on a new meaning.
Luxury and fashion consumers are becoming increasingly vocal in their political views on social media, and fashion and luxury players are fully aware of the need to change to attract and retain talent and meet consumer demand; all the more, since they can be called out publicly due to poor practice. Since 2020, fashion and luxury houses have accelerated their shift towards a more diverse and inclusive world. There has been a notable boost to media attention with high-profile brands increasingly featuring different sized models, embracing all cultures and races as well as offering other ways of being inclusive through story-telling and even for some brands, offering lower-priced entry-level products.
The initial concept of “diversity” is the result of various identity theories established by psychologists since the 1970s, and more particularly, the main eight “socially constructed identities” established by American psychologist Allan Johnson in the 2000s. This model comprises eight major identity traits that help individuals understand who they are and where they come from. The list is not exhaustive but allows individuals and corporates to explore the main social group memberships to better understand themselves and others, and therefore, have a framework to create more inclusive spaces.
Fashion and luxury industry still slow to change
Many brands and companies across luxury and fashion have vowed to develop more inclusive hiring practices and to represent people of different backgrounds in their marketing campaigns. However, influencers and industry surveys report that many brands still fail in their diversity efforts because to date, the fashion industry has been slow to change.
The disconnect between what consumers say they want, what companies report to be investing in and what the reality is across their business models remains notable. This mismatch and disconnect between company and consumer puts customer retention rates at risk, not to mention the danger that such exposure across the media can cause.
Indeed, diversity today still remains a paradox and appears to be contradictory to the sentiments of many consumers, influencers, employees and others who regularly highlight that despite pledges to create more sustainable and inclusive business models, fashion players, like organisations across different industries, tend to suffer from unconscious bias.
Communication and radical transparency called for to connect with “Planet” and “Profits”
Effective communication is key. Internally, DEI should be embedded into the culture of a company via internal communication and employee training. Whilst externally, transparency empowers consumers, it also builds a positive brand image as they value the company’s efforts and integrity. Together, this results in greater customer loyalty and commercial success, which is necessary to make the required investments towards one’s social and environmental goals.
Corporates are aware of this, and the evolution of the terminology from solely “diversity” to include “inclusion” and “equity” in more recent years is revealing. It highlights that companies have acknowledged that organisations are not on a level playing field, and for positive change to be sustainable and durable, they must not only hire diverse talent, or feature diverse models, but aim to make everyone feel that they belong, and provide them with fair and appropriate opportunities and resources to achieve their full potential.
Diversity, Equity and Inclusion sits under the “People” pillar in the wider sustainability framework which also encompasses “Planet” and “Profits”. To be a success, these steps will ultimately connect and be integrated into all aspects of the business lifecycle.
For further insight into DEI and the challenges facing the luxury and fashion industry, listen to Euromonitor International’s podcast here.