The past couple of years has seen a shift in consumer habits. Inspired by the climate crisis and the pandemic, more Australians than ever are buying based on their values, and choosing brands that do right by people and the planet.
The demand for sustainability is particularly obvious in the luxury space, where Australians want the highest quality without compromise – pushing big brands to find inventive, eco-friendly solutions.
So what does the future of luxury, innovation and sustainability hold? To find out, we hear from three experts about how consumers’ appetites, the economics of sustainability, and luxury brands’ approaches are all changing.
“Buy quality, not quantity”
Millennials are going to increase their purchasing power as they age and accumulate wealth, which means sustainability is only going to become more essential for brands in the future.
Kim Chadwick has noticed something of a retro revival among luxury consumers.
“They’re almost anti-consumerism,” she says. “It’s like my grandmother used to say: buy quality, not quantity. I think those sorts of values are coming back to consumers with wealth today.
“It’s not the disposable instant gratification market that we lived in even up to two years ago – the pandemic has certainly given us all more time and understanding of exactly what it takes to get the products we want and the waste that can come with that.”
Chadwick has seen a rise in the demand for sustainable, socially conscious products in recent years – especially among higher-end consumers, who are looking for those less-is-more purchases, and millennials, who have a strong ethical perspective when they shop.
Given millennials are only going to increase their purchasing power as they age and accumulate wealth, sustainability is only going to become more essential for brands in the future. And Chadwick believes greenwashing won’t cut it – companies will need to deliver products that are environmentally conscious from the beginning of the production chain if they want to win over consumers.
“It’s about every single material that goes into a product, where it comes from, how it’s made, and the brand responsible for that product,” she says. “There is absolutely a demand for products that come from companies that tick all those boxes.
“The higher end consumer, they’ve got the money, they can afford anything, so it’s up to the brand to be able to explain exactly how sustainable they are as part of the selling proposition.”
She believes consumers are more discerning today than they were 10 years ago. “A brand has to resonate with their buyers and increasingly there is greater awareness of sustainability and what it really means. Brands absolutely need to deliver the core values of consumers and it’s not just about being bigger and shinier.”
“We need to consume, but it’s more about experiences and ethical values associated with the products and brands that we buy.”
Kim Chadwick is the director of Australian Trend Forecast and has worked as a consultant and trend forecaster for more than 25 years.
“There’s a massive economic case for sustainability”
“Renewable energy is now cost competitive,” says academic Dimitri Zenghelis.
There are obvious reasons why we should all want to do our bit for the planet, says Dimitri Zenghelis.
“The world is increasingly threatened by environmental and climate-related challenges,” he says. “So people might want to shop and live sustainably to play their part in delivering a sustainable future.”
Beyond ethics, there are also big financial incentives for brands, consumers and government to push towards sustainability, Zenghelis says.
“There’s a massive economic case for sustainability. Once you put the investment in, what you find is that low-carbon goods and services are very often superior, cheaper, more productive and more efficient.”
Zenghelis believes that in many cases sustainable solutions are already economically superior – a big shift that’s happened relatively recently.
“We’ve already seen that renewable energy is now cost competitive … We’re going to get cheaper energy as a result of the renewable revolution and we’re going to get better performing, cheaper electric cars.
“In both cases, the cost of solar PV and the cost of lithium-ion batteries have fallen approximately 80%. Ten years ago, if you’d predicted that, people would have laughed at you. And now we know that whether or not you care about the climate, you’re going to get cheaper energy and better, cheaper cars.”
Consumer demand has played a role in forcing this change. But it has also been down to concerted policy efforts – in various degrees in different parts of the world – to decarbonise these sectors.
“We should have done this years ago. We should always have moved to electric vehicles; they’re just better. But the problem is that in economic systems there’s a lot of inertia and you carry on doing things the way they’ve always been done … So to make a leap to a new and better sector, it requires a coordination role for the government and others to shift expectations to make everybody realise that, actually, the alternative is better, and then they invest in it.
“And the magic here is that the very act of investing in these new sectors is what starts to bring the cost down – because you learn by doing; you learn to produce them more effectively.”
Today, Zenghelis says, brands see the “old economy” of fossil fuels as risky. To future-proof themselves, businesses know they have to lead the green revolution – or be left behind.
Dimitri Zenghelis is special adviser to the Bennett Institute at the University of Cambridge and a senior visiting fellow at the London School of Economics.
“Shoppers want more than just quality”
BMW currently offers two fully electric models including the iX3.
“Sustainability is no longer just a global NGO issue,” says Leanne Blanckenberg. “Everyone is talking about it, and everyone needs to be responsible and prioritise it: governments, business and individuals. It’s the collective strategies, small and big, working together, that are needed to urgently slow down global warming.
“Sustainability is something the BMW Group takes seriously. We are committed to reducing carbon emissions throughout every step of the production process, with the goal to be completely carbon neutral by 2050. Already, 100% of electricity purchased for BMW Group’s plants worldwide is from renewable energy sources, and the company recycles 99% of the material waste created during production.
“Core to our strategy is pioneering the production of electric vehicles. BMW currently offers six plug-in hybrid models and two fully electric BMW models in the form of the iX3 and iX, which were introduced into the market in December last year.
“Making the iX3 was a chance to combine premium quality with real sustainable credentials. As well as allowing Australians to hit the road without the CO2 emissions, all parts and materials are made from pollution-free raw materials, and BMW has steered away from the use of rare earth materials. The iX3 can even be recharged using renewable energy, thanks to a partnership with Chargefox.
“It’s all driven by BMW’s belief that luxury and sustainability can – and should – go hand in hand.
“Research is showing that a good product is no longer enough to win over consumers. Shoppers want more than just quality, often looking for products and brands that align with their personal values. This is becoming intrinsic to their purchase decision.
“There is no reason why drivers should compromise on luxury and an exceptional driving experience for sustainability – and vice versa.
“BMW is bringing sustainability and luxury to the fore while extending it through the company’s entire business operations. We focus on the entire value chain; that means supply chain, production and use phase. Our customers can rest assured that a BMW Group vehicle will always have the smallest overall carbon footprint.”
Leanne Blanckenberg is the general manager of corporate communications at BMW Group Australia.
