In 2023, the luxury goods industry is set for a banner year, with an unprecedented record value estimated at EUR 1,500 billion1. However, this year is likely to be marked by a slowdown in growth in this sector, estimated at between 2% and 4% and attributed to the context of geopolitical and macroeconomic uncertainty2. For all that, the luxury goods market remains in Olympian form. But this health comes at a high price for the planet: on a global scale, luxury goods are responsible for 20% of industrial water pollution and account for 6% of CO23 emissions. The big names in the sector, such as LVMH and Kering, have taken matters into their own hands and are multiplying innovative initiatives to integrate sustainability into their practices. What progress has been made in this area in recent years? Against this backdrop, how are brands reconciling sustainability objectives with growth prospects? Certain brands, such as Piaget, owned by the Richemont Group, are providing some answers, as well as their own contribution to the debate.
Luxury facing new challenges
After two years of spectacular growth, “the luxury sector needs to arise. Growth is less dynamic today, and industry will benefit less from higher prices. says Gosia Eggimann, Buy-side analyst, Consumer goods at Lombard Odier, during an exchange with executives from the Piaget watch and jewelry brand last spring. A number of major trends are currently emerging around the world.
Whereas in the past, growth was mainly driven by China, “consumption is now more pronounced in the USA and Europe, which are performing better than China. In 2024, the United States will see growth of 3 to 5%. In Europe, on the other hand, growth is weaker, which is directly linked to the continent’s economic situation, which has had a negative impact on the purchasing power of European households”, explains Gosia Eggimann – as Europe faces persistent structural problems.
Buoyed by Chinese consumption, which has slowed since the post-confinement era, the luxury goods sector looks set for weaker growth in 2024. This trend is confirmed4 by the slight decline in LVMH sales in the first half of 20245. The industry also faces other challenges: “Firstly, maintaining growth while preserving the exclusivity of luxury. And secondly, to succeed in attracting new consumers”, particularly among the growing audiences on social networks such as Instagram and Tiktok. This is a major priority and objective for traditional brands such as Piaget, which need to find their place in this new paradigm in consumer relations. Two sectors are in the midst of a major transformation: jewelry and watchmaking, in particular, whose global market is now worth USD 46 billion (2023)6.
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“Luxury watchmaking, which is still very much dominated by Switzerland [editor’s note: CHF 27 billion in exports in 20237], is experiencing growing interest, marked by a more sophisticated clientele, better educated in the sector and with in-depth technical knowledge,” deciphers Gosia Eggimann. For Christophe Bourrié, Piaget’s Global High Jewellery & High-end Watchmaking Director, this is a certainty: “Today, our customers have truly become experts and have access to the source of information. We are faced with customers who buy all the brands and know as much about the competition as they do about our creations.
A customer base that is also getting younger: in fact, by 2025, Millennials and Generation Z will account for 70% of the global personal luxury goods market, prompting the industry to reinvent itself and align its values with sustainability8.
Among Swiss watch and jewellery houses, Piaget seems to be fully embracing these issues and working towards this goal. As the company celebrates its 150th anniversary this year, Piaget continues to innovate to meet the demands of a new, more demanding clientele, who are also more aware of the environmental impact of the products they use.
Reconciling continuous growth and sustainability
In the luxury sector, the watch and jewelry industry is undergoing a major transformation, focusing its efforts on more transparent and sustainable manufacturing processes and supply chains. ” Traceability has always been at the heart of the luxury goods industry, which is increasingly emphasizing its efforts,” explains Christophe Bourrié.
The brand proves this by being a founding member of the Responsible Jewellery Council (RJC), a global reference organization establishing rigorous traceability and sustainability standards in the jewelry and watchmaking industry. Today, the RJC brings together over 1800 companies of all sizes, across all stages of the watch and jewelry supply chain, from gold and diamond mining to distribution networks.
Read also: Chopard, the jeweller who embarked on a “Journey towards sustainable luxury
An accelerating transformation
These issues are all the more topical given that certain legislation now requires brands to publicly communicate the origin of their raw materials and working conditions with their suppliers9. Some major groups have taken the lead, such as LVMH, which has pledged that by 2026, 100% of its strategic raw materials will be certified using methods that preserve ecosystems and water resources10.
