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Reinventing Luxury: Sustainability and Modern Luxury

António Paraíso, Vera Herédio Colaço, Chris Barton, Patrícia de Melo e Liz, Francisco Carvalheira

The luxury business has undergone a revolution in recent years. Gone are the days when quality brands were so exclusive they didn’t need to listen to their consumers. Now brands have to cater to younger generations who want to know how the products are made, where the materials are sourced, and how sustainable they are. More importantly, they want their bands to engage with them and with their other favourite brands to create an immersive luxury experience.

The luxury industry is among the most powerful in the world, worth €1.5 trillion in 2023 according to a study launched by Bain & Company in 2024.

The global luxury industry encompasses a variety of sectors from personal luxury goods such as fashion and accessories, to luxury cars, hospitality, real estate, and fine art, while the second-hand luxury market is also booming.

And it has been estimated that by 2030 Gen Z will corner 25-30% of the luxury market, while Millennials and Gen Y already account for 50-55%.

No only this, around 85% of the world’s luxury production is in Europe, and yet only 35% of those goods are sold on the old continent.

However, 95% of luxury brands are still family owned companies, while the world market is now dominated by just 10 super companies controlling dozens of brands.

How the luxury brands market is reacting to, evolving and embracing the demands, trends and tastes of the affluent younger generations was debated at an event organised by the British-Portuguese Chamber of Commerce (BPCC), which included three luxury brand authorities in their respective sectors: António Paraíso, Francisco Carvalheira and Patrícia de Melo e Liz. The event was moderated by Vera Herédio Colaço.


Transparency, authenticity and sustainability

With the implementation of new EU legislation and directives to enforce sustainability, consumers are demanding more transparency and authenticity from brands and services. “Many trends are taking place across the luxury industry creating a need to reinvent luxury”.

But what does luxury mean in the modern context, and how does it differ from traditional notions of luxury, and what are the main ingredients shaping the luxury industry today?

sustainable luxury debate

António Paraíso, an expert consultant and public speaker in marketing, luxury, innovation and international business, says luxury is a sociological phenomena of consumption and living. “Luxury does not follow trends; luxury follows the evolution of society”.

It is believed, although there are no official records, that luxury as a phenomena of consumption dates back to the Roman Empire. “Luxury throughout the centuries has been evolving, it is timeless, so it doesn’t follow trends but leads. However, it does follow the evolution of society”, he explains.

António says that in the 20th century luxury used to be meant for and consumed by the over 50s elites with a more classic and traditional profile. However, over the last 15-20 years, there is a new generation of clients and consumers who are under 40 who think differently from their parents and grandparents; some have inherited money, others made money in real estate, technology, and in many other industries. They have a different set of values, and are demanding a new approach to luxury from luxury brands, one that is less ostentatious and wasteful.

“Twenty years ago, no one was talking about sustainability in luxury. Luxury was about wastefulness and flashiness and never about technology. Today, it is about sustainability, circularity, technology and embracing digital to sell the dream and seduce the consumer to visit the store and complete the purchase”, he says.

So, modern luxury is the new luxury that all brands are trying to follow and develop in order to service and seduce a new generation of consumers who value different things than their parents did.

Creating memorable experiences

Another pillar is engaging in memorable experiences. Porsche, for example, opened a new studio in Singapore in March 2024 with a spacious lifestyle lounge, a cafeteria and a library with a networking space and a bar. It doesn’t look like a traditional car dealership.

Dior opened a new store in Geneva with an art gallery inside the store, and a rooftop lounge for sunset cocktail parties. “These are the new retail experiences that young people are demanding from brands”, explains António.

Retail can no longer be just a place for transaction; business transactions can be made online, so if brands no longer offer engaging memorable experiences, people won’t go to the shop. Every brand is now trying to be innovative, bold, provocative, elegant, and seductive in the retail space.

And now this extends to the second hand market too. Rolex, for example, had always forbidden the sale of second-hand watches in their authorised dealers, but in 2023, for the first time ever, they decided to allow their dealers to do so.

Also, several studies show that the affluent younger generation are prepared to pay a premium price for brands with a sound and stable sustainable strategy along the supply chain.

Cross-industry collaborations

Another aspect of modern luxury, and this all has to do with reinventing luxury, is cross-industry collaborations.

In the 20th century, luxury brands always felt self-sufficient; they could be successful on their own with their clients.

Today, the millennials and the ‘gensies’ are demanding that their favourite brands co-collaborate.

“You see cosmetic brands collaborating in events and pop-up jewellery brands collections; fashion brands collaborate with car brands, and these work with whiskey brands”, António Paraíso expands.

For example, the prestigious single malt Macallen whiskey teamed up with Bentley for the development and launch of its new exclusive whiskey. Similarly, Maserati has joined forces with Mattel, Inc.’s Barbie®, driven by the mutual desire to break boundaries and showcase the unique flair of both brands, as well as with luxury men’s clothing brand Ermenegildo Zegna.

Lancôme partnered with the Louvre Museum in Paris in an unprecedented collaboration. Inspired by nine masterpieces of sculpture, and by the lights and colours of the museum, it launched a new skincare and makeup collection: Lancôme x Louvre.


Luxury brand Ambassadors

A relatively new feature for luxury brands has been the appointment of brand ambassadors. Of course, this existed in cosmetics since the advent of Hollywood and cinema in 1920s and 1930s when famous actresses of the day from Joan Crawford to Marilyn Monroe lent their faces to makeup brands and perfumes.

Famous fashion house perfumes and couture lines have continued that trend with supermodels, singers and actresses until today – Christina Aguilera and Elizabeth Arden, Diana Ross and YSL, Cate Blanchett and Giorgio Armani, and the list goes on…

But generally outside of these specific areas, brands were self sufficient and didn’t need brand ambassadors until the last couple of decades. After all, they were sought after because of the beauty and exclusivity of their products.

Today however, technology platforms like Amazon encourage people to leave comments, and the younger generations value the opinions left in comments from like-minded people, and they want luxury brands to have ambassadors who are like-minded too.

For example, the 200-year-old Chopard jewellery brand has the actress Julia Roberts while Tiffany & Co (LVMH Group) hired Beyoncé as its new ambassador.

The future of luxury brands and sustainability

It has been estimated that by 2030 Gen Z will corner 25-30% of the luxury market while Millennials and Gen Y already account for 50-55%. Today, there are more billionaires in their 20s and in all age groups.

Francisco Carvalheira, the Secretary General at LAUREL – the Portuguese Association of Brands of Excellence -, says that the main challenge facing luxury brands in a Europe championing the Green Deal, is the introduction of sustainability regulations that will impact brands according to their dimension.

Some brands, such as Louis Vuitton, are no longer considered true luxury brands because one of the requirements of a luxury product is rarity. This is why some smaller luxury brands adopt a niche presence.

“We have consumers from China to Argentina and the United States and the luxury business is a world-wide business, a least on a bigger scale, and this creates a problem for smaller independent brands. Where and how should they position themselves?”, says Francisco.

“The issue is not just where they want to be; it is more where the company has the capacity to be. In the case of Portugal, it is really difficult for a Portuguese brand to go global because Portugal lacks capacity. Big groups are merging and getting bigger, some of which, like LVMH have up to 72 different brands. It is these super companies who have the capacity to place their brands in countries like China, India and the United States”, he reflects.

These smaller exclusive brands, he says, are opting for a different path; they choose to be niche and don’t go for quantity, but focus on quality and make good profits.

Another issue is that brands manufacturing or selling in Europe have to produce their goods in accordance to European legislation — and they have no way of getting around this legislation.

“The European Parliament is going to approve new regulations that will have a huge impact on the luxury sector, especially where reducing packaging is concerned. But packaging is part of the luxury experience and 95% of the luxury brands are small companies that don’t have the same capacity as the big brands” he says.

Ethically sourced, cruelty-free luxury goods

Francisco Carvalheira points out that young people today want to know where the materials used in the product came from, how it is made, if the gems stones in a piece of jewellery were ethically sourced, did the leathers used in an article come from animals that are not endangered species or were farmed in a cruelty-free environment? An example, is the fashion house Hermes, which used to approve the skinning of animals especially calves, alligators, and crocodiles in order to source their materials.

Animal rights campaigners have convinced many fashion houses, and in turn, their consumers, to shy away from fur for some time. Among younger Western consumers, fur has steadily eased itself out of wardrobes and was finally banned by London Fashion Week back in 2018. It’s speculated that a “fur-like reckoning” is coming for exotic skins as well.

Hermes has bought into their own python and reptile farms in Thailand, to ensure ethically sourced materials and a more ‘friendly’ skinning. Whilst the move is a positive step in the right direction there is now pressure to discard it altogether.

“Today a story involving perceived animal cruelty can appear on instagram in a second and that can instantly kill a luxury brand’s reputation,” Francisco says.

Another example is offending national cultural sensibilities. Dolce & Gabbana, the Italian luxury fashion brand, launched three short videos on the Chinese social media network Weibo to promote its upcoming Shanghai runway extravaganza, dubbed “The Great Show,” in 2018.

The videos featured an Asian woman in a lavish Dolce & Gabbana dress attempting to eat pizza, spaghetti and cannoli with chop sticks. With Chinese folk music playing in the background, a Mandarin-speaking voiceover kicks in: “Welcome to the first episode of ‘Eating with Chopsticks’ by Dolce & Gabbana” — pronounced incorrectly on purpose in a way that mocks Chinese speech.

It caused a scandal; the company was branded racist, belittling and condescending. The result was that Dolce & Gabbana goods were boycotted and the brand may never successfully operate in the Chinese market anytime soon.

“The big surprise for us is it’s not only the young high-flying professionals, all generations are adopting this politically correct philosophy of life,” Francisco says.

And it is estimated that 80% of all luxury products, in terms of their environmental impact, are now taken into account in the design phase, although it will take some companies time to adapt to new EU regulations.

Real estate and sustainability

One company that has been in the forefront of sustainability in the real estate sector for several years now is Savills Portugal.

The group as a whole has a Group ESG Committee that meets at least bi-annually and, the Savills Task Force on Climate-Related Financial Disclosures (TCFD) Working Group that meets at least annually.

Each operating company should, as far as is reasonably practicable, implement its own procedures to give effect to this policy. Business heads in each country have to ensure that environment and sustainability management systems and processes are in place and continually improved to achieve the objectives, including education and training.

Branded residences in particular are shaping the luxury real estate market in Portugal, while real estate developers and investors are aware of meeting ESG indicators and having the right certificates.

“What we clearly see, regardless of the type of investment in real estate, is a concern among investors to create spaces that respect the environment and Sustainable Development Objectives (SDOs) on new and renovated developments.

“International investors are demanding that these requirements are met, and at Savills we have had a Sustainability Certifications Consultancy Service since 2021. We started with one Building Research Establishment Environmental Assessment Method (BREEAM) certificated architect. Now we have six, there is a lot of work, and we don’t have enough people to keep up with demand”, says the Patrícia de Melo e Liz, Co-Managing Partner of Savills Portugal.

“Developers need to be more competitive and in order for that they know that they must respect these sustainability requirements,” she adds.

Patrícia says it is no longer a case of these certificates being “nice to have”; now it is a “must” and all this is just in the three years since Covid-19.

This extends to offices as well where companies are looking for premises that provide not only a sustainable building but also cater to the wellbeing of the employees who work there.

“It’s now not only related to energy expenditure, special windows using smart glass to improve the quality of sunlight, or the level of air conditioning; companies now want to bring an array of amenities and services to the office for the staff, to not only attract people back to offices after Covid, but persuade them they have a better working environment than they do at home”, she explains.

And as Patrícia says, it is a type of luxury to have these services which can range from getting in a masseur, having a gym, or even providing showers.

“At Savills Portugal in Lisbon we installed showers because many people like to jog in the lunch hour and then take a shower when they return to the office. We also offer a bike park, electric vehicle recharging points for sustainable mobility, and these are the kinds of lifestyle luxuries that we need to bring to modern offices today,” concludes the executive real estate consultant.

About the Speakers:

Vera Herédio Colaço is an assistant professor and senior researcher at Católica School of Business and Economics, teaching Sustainability and Fashion, CSO and Consumer Behaviour. She has worked in the textiles and apparel industry, and has solid international experience working with brands and startups such as Timberland, Benetton Group, as well as the Trade Commission of Portugal in New York, Moda Lisboa, and Manifesto Moda, a start-up company that develops health-related protective clothing solutions aiming to prevent diseases like Malaria, Zika and Dengue.

Patrícia de Melo e Liz is the CEO of Savills Portugal, the Vice-President of the Portuguese Association of the Real Estate Professionals and Developers (APPII), a member of estate agencies and brokers association APEMIP – Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal, and is an executive board member of ACEGE – Christian Association of Business Entrepreneurs and Managers. She has a vast background working with interior design projects, setting up Melo e Liz Design – an office fit-out design company — in 1999 when she was 26, and has a vast experience in real estate including both office and residential spaces. She is the proprietor of the college Grow Up which she founded in 2004.

Francisco Carvalheira is the Secretary General at LAUREL – the Portuguese Association of Brands of Excellence, is a board member at ECCIA – European Cultural and Creative Industries Alliance, the Portuguese Association of Luxury and Excellence Brands. He is also affiliated with Heron Executive Aviation, Net Jets Europe, and is a lecturer on the Marketing Product and Luxury Services Programme at the Católica University in Lisbon.

António Paraíso is a expert consultant and public speaker in marketing, luxury, innovation and international business. He has lived and worked in the UK, Spain, Germany, Turkey and Portugal. António has spoken at conferences on many well-known brands such as Giorgio Armani, Lowe, Porsche, Sheraton and the Luxury Network, and collaborates with the World Business Forum. He says he is “passionate about delighting customers”.

Text and Photos:
Chris Graeme – Essential Business