Amidst rapid changes in consumer behaviour, organizations have increasingly adapted and integrated new strategies to stay “up to date” to secure long-term growth. In the luxury sector, this transformation is particularly evident, as the industry is challenged to maintain its traditional values while remodelling business strategies to meet shifting modern demands.
What are the exact shifts that drive corporate change?
The definition of luxury has traditionally been synonymous with excellence, impeccable craftsmanship, scarcity, and compelling storytelling. These pillars continue to shape the foundation and essence of luxury brands, providing key stakeholders, such as clients, with strong brand heritage and a sense of exclusivity.
However, the contemporary market landscape has necessitated shifts in the concept of luxury itself – sustainability and innovation have also become essential factors that significantly influence corporate long-term growth and brand reputation. Among other fields, the luxury industry must adapt and find new ways of transmitting its stakeholder value.
What is important for today’s luxury goods and services consumer?
Modern luxury consumers seek to align their luxury purchases with their personal values, going beyond the mere acquisition of a high-quality product or service. Whilst owning a coveted luxury item can reflect one’s lifestyle choices, evoke emotions, and express individuality, these facets are no longer the sole considerations. Luxury consumers are increasingly looking for brands that embody and prioritize transparency, ethical and social responsibilities in their corporate agendas. This shift is particularly evident among younger generations, for whom these values have become integral. These priority shifts can’t be neglected, as the factors pertaining to corporate integrity might strongly influence purchasing decisions.
To what extent do digitalization and shifts towards omnichannel experience affect the luxury industry?
In addition to corporate sustainability and transparency, innovation is playing an increasingly pivotal role in the luxury market. Seamlessly blending tradition and heritage with cutting-edge, revolutionary solutions might be a challenging endeavour in the industry, yet it might be essential for brands to stay “afloat” in a rapidly evolving, digitalized landscape.
How shifting values shape the global fine jewellery market?
The fine jewellery sector, like other segments in the luxury industry, is undergoing significant transformation driven by shifting consumer values. McKinsey&Company predicts that the fine jewellery industry will become more digitalized and sustainability-focused in the coming years. More seamless shopping across both offline and online, i.e., omnichannel service, is increasingly expected among affluent luxury customers that seek a convenient shopping experience. While brick-and-mortar stores remain integral for providing the personal touch and impeccable face-to-face service that luxury consumers value, online sales in the fine jewellery market are projected to grow, representing around 20 percent of sales by 2025. This trend further underlines the need for jewellery brands to strengthen their digital presence and elevate customer journey across e-commerce channels.
How does the Digital Product Passport (DPP) transform the luxury industry and the jewellery sector in particular?
Merging the physical and digital realms is no longer a novelty in the luxury industry; it has become a crucial strategy for enhancing customer engagement and strengthening the corporate value chain. For instance, Tiffany & Co. introduced its own Non-Fungible Tokens (NFTs) – “NFTiffs”, while Cartier has offered customers the opportunity to experience their fine creations through augmented reality (AR).
The introduction of the Digital Product Passport (DPP) represents another significant innovation in the industry, particularly within the fine jewellery sector. The DPP interconnects physical products with their digital identities. Information about a purchased product is then stored and preserved digitally and can be accessed anytime to verify its authenticity. This allows customers to access pertinent data, such as goods ownership, origin, or manufacturing process.
What does the DPP offer to the luxury industry and the jewellery industry in particular?
- Blockchain-Based Security: The DPP isblockchain-based, which means it offers a secure information that cannot be altered; this provides an additional layer of security for customers, ensuring the data is reliable and trustworthy.
- Transparency and traceability: The DPP provides transparency and traceability of a product and its manufacturing processes throughout the entire supply chain. For example, DPP owners can easily trace the source and type of materials used in manufacturing (i.e., recycled or virgin), track carbon footprints, or, in case of tracing diamonds’ origin, DPP can help determine whether they are lab-grown or naturally sourced.
- Corporate Supply Chain Optimization: By offering detailed insights, the DPP can optimise corporate supply chains and secure a license to operate.
- Enhanced Corporate Sustainability: Due to the ability to trace goods’ origins, the DPP can enhance corporate sustainability efforts by proving their environmental responsibility commitments. As industries strive to reduce their Scope 1, 2, and 3 emissions, this remains of paramount importance.
- Protection Against Counterfeiting: The DPP provides a robust defence against counterfeits in the industry. It enables customers to authenticate a product and its origin – a crucial aspect in the fine jewellery market, where authenticity plays a key role.
According to the Business of Fashion, the European Commission will oblige fashion and consumer goods industries to utilize DPPs for their end consumers by 2026, which further underlines the need for adopting this practice to meet regulatory standards.
To show consumers that they are credible and sincere about driving environmental and social progress, companies will need to establish more traceability and transparency in their supply chains and move beyond the performative marketing that has plagued the industry in the past. (McKinsey & Company, 2021).
How does Aura Blockchain Consortium help the luxury industry players?
The Aura Blockchain Consortium, a non-profit organization, was launched in 2021 by a group of luxury brands with a vision to offer technological solutions for better product traceability, sustainability, and transparency in the luxury industry. Among other renowned conglomerates, the consortium is nowadays steered by industry giants such as LVMH (Louis Vuitton, Tiffany & Co.), Prada Group (Prada, Miu Miu), Richemont (Cartier, Van Cleef & Arpels), and OTB (Maison Margiela, Jil Sander).
The Aura Blockchain Consortium provides solutions for luxury market brands to authenticate their products with DPPs. With its help, brands have introduced the DPP to their customers to ensure sustainability, traceability, and authenticity. For instance, Louis Vuitton presented “LV Diamond” – its first-ever digital diamond certificate, accessible by scanning a unique QR code. Similarly, Prada unveiled its Prada Eternal Gold sustainable fine jewellery collection, fully verifiable via the DPP.
In conclusion, the luxury industry is rapidly evolving to meet the needs of emerging, affluent buyers. As sustainability and digitalization become increasingly important, the Digital Product Passport can help brands pave the way towards greater authenticity, transparency, and traceability.
Would you consider using a Digital Product Passport to enhance your own shopping experience, and if so, why?
