Fashion in Transition: Are Environmental and Social Factors Becoming the New Luxury?

The fashion industry, a place that promises constant change and innovation, is now facing one of its greatest challenges: integrating environmental and social considerations into existing business models

The number of consumers who want more transparency and greater consideration of environmental and social issues in the fashion industry is growing. At the same time, the question arises of how products with higher environmental and social standards can be made accessible to as many consumers as possible. Does this ultimately lead to a new definition of luxury in the fashion industry? What values of identity should luxury goods embody in the future? Will exclusivity, status, abundance, and tradition still be enough in the future to serve the luxury segment, or is a systemic shift needed that links luxury brands more closely with environmental and social issues?

The production of sustainable fashion is complex and involves numerous hurdles that force companies to rethink their strategies and business models. Which companies will be able to do this?

Do small labels that commit to a holistically sustainable strategy have a chance to position themselves alongside established (luxury) brands, for which consumers already show greater willingness to accept higher prices?

This journal takes a look at changing consumer behavior and the significant challenge of restructuring that companies in the fashion industry face in pursuing sustainable goals.

Over the past two decades, people’s consumer behavior has fundamentally changed, as shown by a study by Bain & Company, bringing sustainable fashion into focus. Using the well-known Maslow’s hierarchy of needs, the study illustrates how needs shift when purchasing a product and which values are increasingly coming to the forefront.

It is clear that, in addition to quality and functionality, customers today are placing increasing importance on values such as transparency, environmental aspects, and social responsibility.

See Study by Bain & Company accessed on 25.09.2023

Studies indicate that environmental and social factors are becoming increasingly important to many consumers when making purchasing decisions.

Accordingly, the market for fashion with sustainability credentials is growing steadily, especially among younger generations, as a study by McKinsey confirms. 

See McKinsey Study accessed on 25.09.2023

According to this McKinsey study, as early as 2019, even in the luxury segment, 26% of all purchases were fashion items that the study authors assigned to the sustainability segment, with the trend rising. 20% of respondents cited sustainability as a reason for their purchasing decision. It is also forecast that in 10 years, labels with sustainability measures will account for 85% of market share. 

This not only highlights the shift in consumers’ priorities, but also the growing importance of sustainability in the luxury segment and in sustainable fashion. It is clear that luxury and sustainability are no longer seen as incompatible concepts, but rather go hand in hand in shaping the future of the fashion industry. This point will be explored in more detail later in the journal.

However, the findings from these studies also make it clear that the transition to sustainable action is not an easy task for companies, as the study authors emphasize. Despite all efforts to transform companies, sustainable development programs have proven to be particularly challenging. In fact, only 4% of companies’ sustainability programs have been fully implemented to date, while 47% of these programs have failed.

Implementing sustainability measures in the fashion industry and producing sustainable fashion poses a significant problem for companies, one that comes with numerous challenges. A central dilemma is that the industry still lacks uniform standards for sustainable practices. As a result, companies often face the difficult decision of whether to prioritize environmental or social aspects of sustainability. This uncertainty complicates the restructuring of their business processes and makes it difficult to set clear sustainability goals.

Larger companies also face the challenge of finding trustworthy supply chains and producers in order to manufacture sustainable fashion on a larger scale. The transition to sustainable practices often requires a fundamental redesign of the entire value chain, from sourcing sustainable materials to marketing. This is a complex process that takes a great deal of time and resources.

Because of these difficulties, many large fashion companies often focus only on individual special collections or individual products that are marketed as sustainable.

Critics sometimes see this as a risk of greenwashing when sustainability measures apply only to individual products and not to the business as a whole.

Implementing sustainability measures in the fashion industry is a complex task that requires serious restructuring by companies. It is crucial that the industry work together with governments, NGOs, and consumers to develop clear and consistent sustainability guidelines and strategies. Only in this way can the fashion industry help shape a more sustainable future in the long term and make sustainability an accessible luxury for a broader segment of the population.

See McKinsey Study accessed on 25.09.2023

The combination of luxury and sustainability may seem paradoxical at first glance. While luxury is often associated with excess and exclusivity, sustainability stands for mindful, environmentally friendly consumption. But on closer inspection, it becomes clear that luxury, in its essence, also stands for lasting value and rarity—qualities that align well with the concept of sustainable fashion.

Luxury items are by nature aimed at a small, exclusive target group. Unlike mass production and fast fashion, where products are made in large quantities and over short periods of time, luxury goods are designed to last for a long time. They are crafted with the utmost care and quality, which significantly extends their lifespan and helps conserve resources.

Another noteworthy aspect is that luxury labels generally face fewer of the restructuring challenges that are typical for many mainstream fashion companies. Thanks to higher margins, luxury brands often have greater financial flexibility to invest in transparent supply chains, alternative materials, and additional control and inspection processes. In addition, they produce in significantly smaller quantities compared to fast-fashion companies, as their collections are generally smaller and more timeless. This allows luxury labels to more easily absorb the higher costs of sustainable practices or pass them on to their willing-to-buy clientele.

Luxury brands often operate within conditions that can make the implementation of certain sustainability measures easier. Will this give luxury brands an economic advantage over smaller brands and make them the winners of the decade of sustainability?

See McKinsey Study accessed on 25.09.2023

According to organizations such as Greenpeace and British journalist Kate Fletcher, the founder of the “Slow Fashion” concept, economic success should no longer be measured solely by sales and profit. Organizations like Greenpeace, along with experts such as Kate Fletcher, argue that environmental performance and social commitment should also be included in the assessment. This new perspective calls on companies to take a holistic view of their business activities, in which sustainability and social responsibility play a decisive role.

A key point in this rethinking process toward sustainable fashion concerns production and sales cycles. Instead of developing monthly collections for the entire world or for continents, which leads to massive overproduction and waste of resources, companies should increasingly focus on regional or national production in the future. This enables shorter supply chains and better adaptation to local needs and cultures. Through this measure, the fashion industry can take an important step toward sustainability and ecological responsibility. However, among the fast fashion giants, the familiar growth formula of “more and more, more and more often” still prevails. And the willingness of market-leading brands to forgo the revenue that comes with it remains very limited.

Whether in the luxury segment or not, the need to give greater consideration to environmental and social aspects in the fashion industry presents not only major challenges for companies, but also requires consumers to fundamentally adjust their purchasing behavior and get used to new product offerings and pricing structures. Even if the willingness is there to invest more in sustainable fashion in the future, in the long term only a radical rethink in the evaluation of economic success, together with a complete systemic change in companies’ value chains, can lead to lasting success. As long as this transformation in most companies remains overshadowed by current challenges, the comprehensive consideration of environmental and social aspects in the fashion industry will remain a challenge for many companies and consumers.

Topics such as transparency, material sourcing, and social responsibility are also becoming increasingly important in the jewelry industry. Consumers are showing greater interest in where precious metals and gemstones come from and under what conditions jewelry is made.

At Maren Jewellery, we focus on recycled precious metals, lab-grown diamonds, and transparent information about our materials and manufacturing processes. In addition, we are continuously working on improving our supply chains, packaging, and production processes.

Our goal is to create high-quality jewelry pieces that combine design, quality, and transparency in materials and manufacturing processes.