Luxury Brands Cope With an Image Problem

Running in heels can be hazardous for your health, but since the global financial crisis, working as a corporate executive has its own particular perils. Consider Francois-Henri Pinault, chairman and chief executive officer of PPR, a French multinational focused on luxury brands and retail operations: earlier this month, he was trapped inside a taxi for almost an hour by around 50 disgruntled employees, members of PPR's European workers' council who had participated in a meeting with Pinault and were angry about planned layoffs at two of the companies retail units. Across France, fellow execs have found themselves in similarly frightening circumstances—four Caterpillar directors were reported to have been blocked in as well on the same day, while the director of Sony France and three Japanese execs were reportedly held hostage for 24 hours by workers from a factory due to be shut down—and during the recent G20 summit in London, luxury boutiques like Gucci and Italian cashmere house Loro Piana bolted their doors and boarded up their windows against the storm of protesters who took to the streets, full of more pent-up anger than ever before.

Until now, the luxury world has represented an ideal lifestyle that the masses aspired to achieve. The models in advertising campaigns for companies like Michael Kors and Jimmy Choo are perpetually stepping off private jets or lounging poolside in five-inch stilettos. But the economic meltdown has left luxury with an image problem. Signifiers of social status are suddenly out of fashion, and those who previously flaunted their toys without hesitation are thinking twice before taking their Bentleys out for a spin, lest they end up with egg all over the windshield, or worse. Banking scandals and Bernie Madoff's massive fraud has made the luxury machine look guilty by association, and, somehow, luxury needs to regain its luster.

Unfortunately, consumers are showing little response to the tired, old marketing strategies on which the industry has relied for the past decades, and elite brands are in danger of coming across to consumers as alienatingly out of touch. The solution, then, is to look toward luxury's next evolutionary stage: value-driven, sustainable, conscious—the antithesis of its traditional glorification of conspicuous consumption.

Claire Hamilton, an editor at WGSN, a leading trade publication focused on industry trends, confirms this shift, observing that "the brand logo has come to signify a cheap substitution for workmanship, and a meaningless markup. People want to believe that they're smarter than that." For labels struggling to come up with an alternative solution, she advocates "producing fewer items of greater value and durability, better suited to the more eco-conscious direction in which consumers are moving. Companies that produce finely made, long-lasting products will win admiration from aspiring customers, who in this era of connectivity are reading more about the brands they buy, and sharing more opinions. It's time to show off the real mechanics behind the brand, and not just the celebrities wearing it."

Within the mainstream fashion establishment, some designers were already onto this scent before the crisis ensued. Stella McCartney, for example, has designed according to her ethical principles since the beginning of her career, eschewing leather and fur, developing a 100 percent organic skincare line that avoids any animal byproducts and designing wearable pieces that carry over from year to year, as opposed to expiring at the end of each season. When she first started out, the fashion landscape was dramatically different—the green movement hadn't hit critical mass, the global economy was flush and conventional wisdom held that a designer couldn't succeed commercially without using leather in their accessories, which form the backbone of a brand's bottom line. McCartney proved her naysayers wrong, becoming one of the Gucci Group's first young designers to post a profit and carving out a unique niche as the go-to girl for the stylishly aware.

In Brazil, far outside of dominant Western luxury circles, sustainability is more than just a buzzword—it's a beginning-to-end approach to material production that has its roots in the country's indigenous cultures, and it has the added benefit of offering a particularly apt market niche for the current moment. Mauricio Borges, the director of APEX Brasil, the principal trade organization that supports the country's fashion initiatives, explains why Brazil is staking its fashion success on an environmentally conscious strategy: "We have been working on sustainability for a long time, but in the beginning not too many people believed in it or shared the same thoughts. But we kept emphasizing it, and you can feel it, not just in fashion, but in all kinds of industries. We don't have strong luxury brands in a way that can compete with Europe, but we have other kinds of assets that offer a unique opportunity." Borges doesn't frame sustainability in a pure market context, however. He feels strongly that in order to succeed in the long term, it must have a more authentic appeal. "You can't think of sustainability from just a brand-identity perspective, it's also in the process of production, in the original vision. It's not artificial, it's authentic and part of the culture of creativity, creating products based on these values." Designers like Oskar Metsavaht of Osklen and Amapo shrewdly work this politically correct rhetoric into their international market pitch, developing the idea that buying Brazilian has an intrinsic social value, which consumers can share in if they shell out.

By investing in an image that encompasses more than blatant self-interest, luxury brands can build a postcrisis business foundation that rehabilitates the industry's reputation and offers a compelling rationale for consumers to start spending once more. If the profit motive isn't convincing enough, then perhaps a concern for personal safety will do the trick. Until now, the most dangerous encounter gatekeepers of the good life had to worry about was having their chinchilla coat hit with a quart of paint by protesters, but today, we're on the verge of finding ourselves in the middle of a sequel to "The Bonfire of the Vanities," and the risk of physical harm is no fiction. Considering the current climate, luxury execs might want to reconsider a "let them eat cake" attitude. As chic as Marie Antoinette might have been, turning her back on social responsibility as she refilled her champagne flute cost her more than her 401(k).