Consumers are increasingly considering a brand’s ethical and sustainable practices when purchasing. According to Nielsen reports, this affects consumer spending: 73% of millennials and 66% of consumers worldwide would be willing to pay more for sustainable products -Z Fashion consumers (43%) actively seek out and choose brands with a trusted reputation for sustainable practices to have. Against this background, fashion consumers, especially younger ones, are also becoming increasingly aware of the fraudulent methods of companies trying to “greenwash” by capitalizing on sustainability trends without making any commitments.
Even global multi-brand fashion groups like H&M can no longer save on empty promises. The brand is being sued this year over greenwashing allegations, with one lawsuit claiming it is exploiting consumers’ interest in sustainability and products. That is “environmentally friendly” through extensive and potentially misleading marketing. Recently, Boohoo, another fast-fashion giant popular with Gen X and Z, received viral backlash online for greenwashing after launching a “sustainable capsule,” despite the principles of fast-fashion production being anything but sustainable. The more respected a brand is, the greater the decay can be. And the luxury industry is no stranger to this level of scrutiny.
Luxury consumers are watching
A few years ago, Burberry was called out for incinerating $37 million worth of goods instead of donating or recycling them. Meeting environmental and social responsibility standards remains a challenge for luxury brands, with many, like Louis Vuitton, coming under scrutiny regarding environmental and social impacts. While many luxury brands are setting goals to improve their practices, such as B. reducing the greenhouse gas emissions caused by their operation’s problem, these are not publicly available. Evidence that they are on track to achieve these goals, which can jeopardize their reputation. Reputation is everything on the luxury circuit. Suppose luxury brands are to protect themselves against a customer base increasingly wary of deceptive practices. In that case, they must demonstrate that their commitment to sustainability goes beyond mere good intentions by incorporating verifiable sustainability into their business models.
There is tremendous pressure for greener practices everywhere. And while many well-intentioned luxury brands are responding to the call for more sustainability, the challenge often lies in the fact that tracking progress against green goals within existing systems is incredibly complicated. This is where blockchain comes in.
New consumer demands require unique solutions
Innovative new technologies can help luxury brands digitize and automate their supply chains. Blockchain, for example, can help track, trace, and verify the sustainability of any luxury item with immutable certifiability, making it an attractive solution for brands that understand the importance of ensuring the sustainability of their products and maintaining their reputation to protect consumers. Trust is a critical factor in retaining customers, and today’s consumers demand undeniable proof of luxury brands before they buy from their advertising. Only 18% of euro consumers said they trust public authorities when verifying environmental claims, and only 14% of respondents said the same about private accountants. With this increasingly environmentally conscious consumer base, brands must find ways to show that their products are sustainable and that product buyers align with them with these values when generating brand loyalty.
Consumer concerns about greenwashing stem from brands that lack transparency in their practices. This is where the blockchain can record the entire history of a product, assuring consumers that the products they are buying are proven to be sustainable. Luxury brands can provide their customers with accurate records of their sustainability, building brand trust and customer loyalty, which is essential for customers who want to ensure they are buying sustainably.
Products. Implementing blockchain technology into the direct consumer sphere could drastically change how brands communicate with customers. Investing in luxury brands seems to pay off.
A passport to the future
Another area where luxury brands are trying to increase transparency and ensure provenance is digital product passports. These digital certificates allow customers to access a product’s records and history through a mobile application. As a blockchain-based tool, customers can track a product’s lifecycle from creation to sale, validating the origin of the materials used and the markets in which it is sold. Digital product passports provide irrefutable proof that luxury companies use sustainable and ethical practices and protect them from greenwashing allegations.
They respond to the growing needs of shoppers, whether Gen Z or Gen X. Demonstrating sustainability practices through genuine, tangible efforts is non-negotiable for today’s luxury brands, primarily as they target and mainstream younger demographics. You must also understand the importance of a consumer-centric approach and personalized online experiences. According to a forecast by Bain & Company, by 2025, the internet will be the most prevalent channel for personal luxury goods and will account for up to 30% of the global market. They were closely followed by retail stores (26-28%) and outlet stores (13-15%).
As digital natives, the new generation of buyers expects intuitive and modern online experiences, just as they value authenticity and brand integrity. It is unlikely to be a temporary trend. If luxury brands want to be successful over the long term, sustainability testing is essential to connect with the next generation of tech-savvy and environmentally conscious consumers. Luxury brands can secure their place among future generations by leveraging innovative technologies like blockchain.