Changing Perceptions on Sustainability Among Gen-Z in China

Today, most brands have dedicated sustainability initiatives, many of whom have shaped a strong narrative around it. Be it Gucci using recycled packaging or Lamborghini pledging a full transition to hybrid cars within the next three years.

For leather goods, blockchain initiatives like Aura (backed by LVMH, Richemont, and Prada) aim to increase the transparency of materials and supply chains. During the past year, Equite and IMS Hong Kong did a long term, AI-driven study to look at 'what women want' and found that there were subtle, yet significant changes in consumer sentiment among Chinese luxury consumers that the pandemic brought to the surface.

What stood out most was the finding that Chinese consumers cared about corporate social responsibility and environmental responsibility, particularly among Gen-Z.

Participants of the study anecdotally mentioned that if the store staff cannot convincingly tell them about their sustainable measures or recycled materials, they would turn right around.

People want transparency.

Why Transparency?

2020 has definitely shifted consumers' priorities tremendously. In China, the emotional response to COVID-19 has resonated with three main things: environment, health and community. Today, we'll be exploring two of those areas, namely the community and environment.

1. Environment

The pandemic has revealed many ecological and environmental problems that were swept under the rug and put on hold after the industrial boom. As the whole world quarantined, people spent most of their days searching through web, checking their social media accounts and working from home. This constant connectivity revealed many environmental concerns that were posted, reposted and shared. Now, things are slowly getting back to "normal", but the problems are still present.

This is how Generation Z started shaping a new consumer mindset. Now, they want to support brands that show their environmental footprint and help solve existing problems. For example, California-based Patagonia launched its initiative named Common Threads Initiative that encourages customers to buy and use clothing by 4R's. Those commitments are Reducing consumption, Repairing, Reusing and Recycling clothes to be bought. Similarly in China, companies like Redress and Chung Kung Garments are carving their ways towards the sustainable, conscious and responsible fashion.

2. Community

Following COVID-19 there was a global cry for citizens of Wuhan. Brands supported their customers, showing their compassion in the form of big donations and heartfelt messages. During the outbreak, people started being more conscious about their health, lifestyle and became empathetic towards people suffering from the novel coronavirus. In China, an influencer Li Jiaqi took the lead in collecting $11 million for Wuhan from his viewers.

There are many influencers who have tried fighting the virus online by supporting the outbreak victims, giving tips on how to cope with the new routine, and collecting donations. At the same time, Bosideng collected $45.7 million by donating down 150,000 jackets, to help the frontline workers to counter the cold weather. At a large scale, Chinese companies offered help and generally have resonated with the community's worry and compassion, and it shows how the outbreak helped the community to soften up and re-arrange their priorities as a whole.

3. Generational Shift

As the 20-or-under generation will become the dominant consumer group in 10 years, luxury brands are having difficulties in understanding the needs of Generation Z. Young customers are very different from prior generations since they perceive themselves as personal brands. The influence of social media represents brands as extensions, expressions and affirmations of a Gen Z's personal brand. Most importantly, the things like sustainable practices, diversity, inclusivity, transparence, and corporate social responsibility are presenting them more value than to any generation before.

Brands were used to playing it safe for years when it came to sustainability, choosing to be reactive rather than active on it. However, with the rapid shift in consumer sentiment, playing it safe is now playing to lose. The traditional luxury, sustainability playbook was to reduce a negative footprint, exchange materials for newer, more sustainable ones, and provide more transparency. But today’s new consumer expectations require a different mindset.

Conclusion

We believe that sustainability will become one of the strongest enablers in the luxury industry. It is at the top of Gen-Zs’ minds, and so few brands have even tapped into its potential yet. Now is the time to switch from playing it safe to playing to win.

Brands that play it safe on sustainability will only be able to catch up and not lead. The more a brand waits, the farther it will be from the true innovators. Sustainability is a huge opportunity for innovation, disruption, inspiration, and extreme value creation. It is also a huge opportunity for brand storytelling, especially if the storytelling elements come from the brand’s heart and are authentic and not made up.

“Greenovating” has to replace “greenwashing.”

Greenovating puts passion for the environment into innovation initiatives. Because in luxury, passion is always contagious. When consumers sense that brands are passionate about things other than sustainability, their initiatives will not resonate as well.

Inspiration has never come from playing it safe. Luxury brands create extreme value by creating desire and enticing Gen-Z and their Millennials. That requires commitment, risk-taking, and inspiration. It also means radically rethinking what brands have been doing in the past to create a competitive advantage.