‘Generation Z’ encountering luxury brands: IPR strategy as a potential tool for reaching sustainability goals?

Posted on

23 Nov

2021

Dittmar & Indrenius > Insight > ‘Generation Z’ encountering luxury brands: IPR strategy as a potential tool for reaching sustainability goals?

Sustainability and the increasing importance of the so-called circular economy are today’s megatrends affecting the luxury industry. They also constitute key drivers for its long-lasting competitiveness. The competitive environment in which luxury brands operate, coupled with transformation in the lifestyles of Generation Z[1] is now evolving in a more sustainable direction. It triggers the need for the luxury fashion houses to redefine their business models and to polish their IPR strategies. What do big luxury brands need to do to become more sustainable? Or are they already there? And how should they align their IPR strategy with the essential sustainability goals? We interviewed Associate Professor Jonas Holmqvist from KEDGE Business School, Bordeaux.

Intellectual property encompasses protectable, intangible assets that result from creative innovation. Intellectual property rights (IPR), such as trademarks, copyrights and design rights, can protect these assets from wrongful use. To make the most out of these rights, companies benefit from having an intellectual property rights strategy (“IPR strategy”) for managing the company’s intangible assets. This includes managing the company’s IPR portfolio. An IPR strategy helps the company to manage its intangible assets to maximise their commercial benefits and to prevent their unauthorised use by other parties. As brand management essentially comprises the protection and enforcement of IPRs, a correctly formulated and implemented IPR strategy can be a crucial part of the company’s broader strategy and a tool for appropriate brand management. Together with marketing activities, IPR strategy and brand management are important elements of maintaining a company’s competitive edge.

In particular, companies operating in the luxury industry need to have a solid IPR strategy in place to achieve their goals. A luxury brand cannot be built overnight, so a robust IPR strategy must focus on the company’s long-term commercial objectives instead of shorter-term product life cycles. It is also important for luxury companies to achieve and maintain the relevance of their brands in a time where Generation Z’s preferences and trends are constantly changing and evolving, influenced by phenomena such as digital media and social networking. Concerns about climate change, planetary boundaries and sustainability are already present and the environment-savvy Generation Z wants to make an impact through their personal choices.

[1] Generation Z: born after 1995, they live in an era of economic crisis and rapid technological transformation.

Is the ultimate 'luxury' not only becoming sustainable, but also digital?

Is sustainability becoming a new standard for ‘luxury’? What is the relationship between sustainability and luxury brands? These are some of the questions that Associate Professor of Marketing Jonas Holmqvist is currently researching at KEDGE Business School in Bordeaux. Holmqvist is the frontline luxury marketing expert and researcher investigating particularities of the luxury industry. Among other things, he also co-operates with the luxury group LVMH, which owns brands such as Dior, Givenchy and Louis Vuitton.

We would all have a better world if we would buy less, but better.

Associate Professor Jonas Holmqvist, KEDGE Business School, Bordeaux.

According to Holmqvist, many fashion luxury brands are already very sustainable in their production, as their products are made of higher-quality materials, and they often cause less pollution when compared to fast fashion products. Their production often takes place in the brand’s country of origin, mainly in Europe, where a great emphasis is put on adequate working conditions (social sustainability) and minimising the negative impact on the environment (environmental sustainability). In addition, the garments are usually made to last a lot longer than fast fashion garments. These factors together contribute to more sustainable products and promote circular economy. In Holmqvist’s words, “we would all have a better world if we would buy less, but better.”

Holmqvist argues that the sustainability of many luxury products might not be a result of a strategy per se, but rather an inherent attribute of the products. However, current societal trends such as environmental consciousness inevitably also have an impact on luxury brands. Consumers, and especially the younger generations, nowadays place increasing requirements on brands regarding their environmental and societal impact. Luxury brands have responded by, for example, releasing fewer and more timeless collections and by reusing the material from products that have not been sold.

What is the relationship between IPRs and sustainability then? Holmqvist reveals that some luxury fashion brands have developed different kinds of digital tracking systems or tracking codes that allow the consumer to track exactly where the product has been made, for example. These tracking systems have two functions: the same information that the consumer can use to secure the authenticity of a product can also be used for controlling the sustainability of the product.

Is the ultimate ‘luxury’ not only becoming sustainable, but also digital? This brings us to the potential emerging blockchain technologies for the digital luxury market, such as non-fungible tokens (NFTs). It has been noted that the road to NFT riches is still paved with an abundance of question marks for high street fashion brands.[2]  NTFs are still unregulated, but hold significant market value. For instance, the most expensive NFT art piece ever sold, a digital artwork collection by artist Beeple, auctioned for over USD 69.3 million.[3]

It has been argued that even the economic aspect of the fashion industry might benefit from a low level of IPRs, as widespread copying of trademarks and designs drives the fashion circle faster and thus boosts the economy. In the most recent research, it has been suggested, however, that a higher and more systematic level of protection of fashion designs could even support sustainable development.[4]

According to Holmqvist, copying and in particular counterfeit products can be a significant problem for the fashion industry due to the prevalent role of protected IPRs in the industry. The massive production of cheap, low-quality products is far from sustainable in many respects. By pursuing an effective IPR strategy, companies can contribute, at least to some extent, to a more sustainable fashion industry. This is already common practice among luxury brands, and, considering current trends, it can be assumed that sustainability will play an increasingly important part as integrated components in IPRs, as well as the development of IPR strategies both in the luxury industry, as well as more broadly.

[2] Anna Tong. Luxury fashion brands poised to join the NFT party. Vogue Business, 5 April 2021. https://www.voguebusiness.com/technology/luxury-fashion-brands-poised-to-join-the-nft-party, accessed 19 October 2021.

[3] Christie’s. Beeple: A Visionary Digital Artist at the Forefront of NFTs.   Available at: https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx, accessed 19 October 2021.

[4] Recently, Heidi Härkönen has also pointed out in her doctoral thesis Fashion and Copyright: Protection as tool to Foster Sustainable Development that “a legal framework that permits a business model based on copying is a factor that enables certain unsustainable structures of the fashion industry“.

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