Sustainable initiatives in the luxury industry

Abstract

Purpose – Prior research on how sustainability initiatives influence attitudes toward luxury companies and products is limited, and evidence is frequently contradictory. The goal of this study is (a) to examine how sustainable initiatives influence perceptions about luxury brands and products and (b) to assess the relative effectiveness of different types of initiatives. Design / Methodology – To test our predictions, we employed an experimental approach and examined the data using quantitative analysis. The study evaluated if and how customers' willingness to pay for sustainable items varied across different types of sustainable initiatives. After being randomly exposed to one of five scenarios (control, sustainable practices unrelated to production, efficient production, recycling materials from the oceans, and recycling materials from other luxury ateliers) participants indicated their willingness to pay and then filled out a number of questions assessing the potential mechanisms. Findings – The results of the study suggest that sustainable initiatives vary widely in their effectiveness, with some eliciting greater willingness to pay among consumers than others. Specifically, none of the conditions affected the consumers’ willingness to pay, except for the condition involving recycled materials from other luxury ateliers. In this condition, participants indicated a higher willingness to pay for the product in question. A potential explanation for this effect is the perceived luxuriousness of the brand. Research limitations – This study was based on a hypothetical scenario, so participants were not spending their own money. Further, since the luxury brand chosen in the experiment (Yves Saint Laurent) is well-known and has great market credibility, it may have resulted in a ceiling effect in participants' quality and luxury judgments. Then, while we discovered that curtailment practices involving the use of recycled material from other luxury brands have a good effect on consumers' willingness to pay, we were unable to document why this effect occurs in the first place. Practical Implications – This study can assist brands more successfully promote sustainable practices in the luxury industry. Furthermore, this work helps to improve knowledge of how people view recycled products and may help to reduce future demand for virgin materials.