LONDON — Positive Luxury, the London-based company that promotes companies with strong ethical and environmental standards, and EY Beacon Institute, part of Ernst & Young Global, have released a joint report focused on retail and businesses that balance “purpose” with driving profits.
“Shopping With a Purpose,” which was released earlier this week, aims to highlight the increasing number of brands and retailers that are concerned with best practice, supply chain transparency and whose product is built around a specific philosophy, such as sustainability, well-being, charity or the environment.
It also argues that luxury brands now see sustainability as a means of generating value, as modern consumers become less interested in using fashion to achieve status and more concerned with personal experiences that appeal to their values.
“We’ve seen ‘purpose’ as being a secret sauce for how organizations are driving innovation, attracting talent and connecting to consumers, particularly in the retail space,” said Valerie Keller, global leader of the EY Beacon Institute, adding that the report chose to focus on luxury brands, as they are the ones that set the industry trends.
By 2020 global retail sales are set to reach $27 trillion and retailers will more likely be choosing their products with purpose in mind, while manufacturers will be more connected to flagships, according to the report.
It added the new demand for “purposeful fashion” has largely been driven by Millennials, who are increasingly looking for trust-based relationships and are more wary of big corporations. Some 83 percent of Millennials surveyed for the report agreed with the statement, “There is too much power concentrated in the hands of a few big companies.”
In addition, sales of sustainable goods showed a four percent increase globally last year, while 66 percent of the survey participants said that they would be willing to pay more for sustainable goods.
“We’ve seen a decline in trust in political institutions and businesses, times are volatile, currencies are fluctuating, so it’s even more relevant to have a trusting connection with these brands,” said Keller. “You can say part of what is influencing this is the rise of the democratic voice, so consumers feel like they have a voice and are entitled to know the transparency of their supply chains.”
She added the current disruptive business environment has made corporations more willing to shed light on issues with their supply chains and general processes. “Having authenticity and purpose doesn’t mean a business is perfect, but people are willing to be forgiving if they see a higher purpose. At the same time, with the rise of social media they can also tear you down if you are not open to talking about key issues in your business.”
The report points to London-based designers Christopher Raeburn and Stella McCartney who have worked towards developing innovative materials to replace leather and PVC, as well as brands such as Nike and Lululemon, which have tried to go beyond selling product to help customers achieve their well-being goals, offering local running clubs or in-store yoga sessions.
Keller talked specifically about Lululemon’s strategies: “It’s not just about selling you some workout gear. They go beyond that to create an experience for you around being healthy. So in addition to capturing that in the traditional sense for the consumer, by providing a good shopping experience, friendly staff in store or easy digital service, there’s also the feeling that they are trying to create real well-being.”
Brands are also looking to technology innovation as they seek to appeal to purpose-minded consumers. According to the report, over the next five years brands will offer more tech customization tools and will work towards shortening the time gap between online orders and deliveries, using new technology.
The report named the brands it considers forward-thinking in terms of technology. They include Burberry, which partnered with Pinterest earlier this year to create customized beauty boards for users; Harvey Nichols, which uses personalized technology to offer concierge services to clients, and John Frieda, whose recent “Shades of Me” campaign used an Instagram algorithm to analyze users’ personal feeds and generate customized video stories.