Beyond Craftsmanship: A New Business Model

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One of the core issues in international marketing is whether the luxury fashion sector can be truly sustainable. And if so, are there luxury product development and manufacturing business models that are weaving ESG/CSR objectives into their daily operations? When entering new global markets, are they committed to presenting their business model in a way that avoids the perception of self-promotional sustainable marketing?

Embedding sustainability into the design and development process is critical. The European Design Council has estimated that 80 percent of all environmental impacts are determined at the design stage. The Ellen McArthur Foundation has made the design process and product ingredient awareness a first principle for achieving a circular economy. And the Boston Consulting Group, among other global consultancies, issued a six-step strategy for managing sustainable product design.

Unique Services

Italian luxury and premium leather goods producers are known for their craftsmanship and highest quality, but these virtues are now table stakes, which all competitors must have to enter a market. The result? There is no competitive advantage in relying on quality and design. To be competitive, product development atelier companies must find a unique set of services to assert a defensible and compelling point of difference.

Eco Impact

The absence of differentiating services impacts many fashion retailers who may be struggling to reduce their eco-impact and are looking for guidance from suppliers. Recently, non-profit financial think tank Planet Tracker analyzed 3,900 companies across the textile supply chain reporting that retailers are not engaging actively enough with suppliers and manufacturers to help them reduce emissions. As a result, retailers are missing a big opportunity to do more for the planet. To a large extent, this is because many product development ateliers rest their laurels on craftsmanship alone and do not offer added-value services – especially eco-based solutions.

However, we are seeing signs of an emerging value model that incorporates sustainability standards and related services into the design and product development process. It’s key for the design concept to include components that are often left to the client to source so that designers maintain certification control to the brand owner and don’t lose control over the sustainability protocols and processes needed at the design stage as well as the sourcing that follows.
Embedding sustainability into the design process is critical. The European Design Council has estimated that 80 percent of environmental impacts “are determined at the design stage.” The Ellen McArthur Foundation has made the design process and product ingredient awareness a first principle for achieving a circular economy. The Boston Consulting Group, among other global consultancies, issued a six-step strategy for managing sustainable product creation and design.

Design & Materials Awareness

The failure to think strategically about product development and design results in products that may not meet ESG/CSR standards for circularity, but also miss the opportunity to add value to the relationship with in-depth sourcing. Product ingredient awareness must be managed and certified, including locating, testing, and creating prototype samples for the client made from alternative highly sustainable fabrications, identified by the company’s R&D, and then worked on by the ateliers and craftspeople.

There are many reasons why this isn’t occurring across the product design/development landscape. Taking a closer look at the client (retailer) and supplier (atelier) relationship, the retailer may look for ESG protocols in product development from the atelier, while the atelier may be more focused on their own sustainability journey. Suppliers may also lack the retail experience to understand the demands of a retail operation and the values of a retail culture. So, for example, most retailers would defer to the supplier to find the latest in alternative yarns and fabrics that could offer a higher sustainability index and manage the search and sourcing process. The retailer may hope to find this guidance, but ateliers seldom see this as an essential service.

Data Points

Once a values-based cultural shift occurs, marketing can kick in. Values-based marketing evolves to match consumer sentiment at the point of sale on product, price, and the decision to purchase based on sustainability. Retailers can share proprietary sales data to measure the performance of products with their suppliers to close the loop on the product design/development process. Sustainable luxury marketers can offer insights into best sellers etc. This data strategy informs a craftsman culture and guides insights influencing product development. That is a competitive advantage.

A Florentine Solution

Few Italian design houses have access to or the inclination to collect timely, relevant retail data. An exception is The Tivoli Group in Florence. Tivoli serves the upper premium and luxury fashion sector for handbags, leather, innovative proxies for leather, accessories, and small leather goods. Having cut their teeth as a one-store retailer, they gradually transitioned to a chain of leather distributors in Italy. Their brand and operational DNA is drawn from both retail and the vertical integration of distribution networks. They are market-driven and incorporate not only sustainable solutions into product development and manufacturing but also have a sensibility and vision of the market from a retail perspective. This retail orientation is brought into even greater focus based on the product and market intelligence they gather naturally from developing and manufacturing product for the global retail chain of luxury leather boutiques which are part of the Tivoli Corporate Group. When aggregated, this data informs product design and development and adds to their sourcing management insights and the service they can perform beyond craftsmanship.

ESG & CSR Values

With its values-based operational perspective, Tivoli acts as an advisor on technical sustainability protocols in product development buttressed by its unique manufacturing ethos. This ethos informs and encourages handmade traditions characteristic of ateliers, integrates sustainability values, and is guided by their unique industrial manufacturing logic enabling scalability. This recognizes and affirms human value issues associated with a vertical production process. They have published a Code of Ethics which spells out how and why, it honors and respects each individual in the global ecosystem. Bringing in an outside agency specializing in orchestrating the ethos and integrating ESG/CSR values into operations was also a significant value add.

Another Word on Values-Based Marketing

Steve Jobs said, “Marketing is about values. This is a very complicated world. This is a very noisy world. And we’re not going to get a chance to get people to remember much about us. No company is. And so, we have to be really clear what we want them to know about us.” And more on that topic, marketer Haley Walden writes that “Values-based marketing happens when a brand connects with its audience based on shared values. It’s an outward-focused strategy fueled by authenticity and focused on doing good in the world. Beyond what a brand sells, values-based marketing seeks to resonate with its target audience on closely held social and ethical issues.”

Conclusion: Beyond Craftsmanship

Beyond Craftsmanship is a business model characterized by specific strategies and tactics. Here are the fundamentals needed to put the model into your business.

  • Engage an outside firm skilled in weaving ESG/CSR protocols into product development to avoid any potential “fox in the hen house” syndrome. An objective third party is a sustainability value-add.
  • Have a sustainability officer who is market-focused on retail with expertise on analytics based on real-time market research.
  • Foster positive human values, thereby orchestrating the inclusion of ESG/CSR standards into everyday operations and product development.
  • Collaborate, cooperate, and share insights to level up the industry. This open-source approach shared with competitors, transcends a self-serving motivation and helps move the sustainability needle forward.
  • Be candid about “what needs to be done” to solve problems and make forward progress. Avoid Greenwashing and stake a thought leadership position. The benefits are significant.

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