Over the past year and a half, consumers and companies have been adapting to a new way of living and their outlook on luxury goods may be undergoing change. There is growing awareness of environmental concerns and the need for sustainability in how goods are produced and used.

Luxury goods companies are reacting positively; and even though the industry is returning to live events and in-store sales, both sustainability and digitalization now feature more prominently in their strategies for the future.

Digitalization and sustainability goals in the luxury goods industry are driving fashion-tech investments

The world of fashion and luxury goods is undergoing extensive change. What were previously choices of product design of just a few environmentally-conscious and courageous innovators, are now moving closer to the mainstream, involving almost all the companies in the industry. Increasingly, luxury goods companies are changing their approach and mindset, incorporating sustainability and digitalization into their long-term strategies, to align with consumers’ demands and new regulatory requirements.

They are focusing more on sustainability in the design and production of luxury goods, and at the same time are accelerating the adoption of digital solutions to engage with consumers and deliver luxury shopping experiences using technology. The jump into the digital world has been faster than expected, and the aim of companies now is to refine the solutions already implemented and develop new digital solutions. This increased pace means a complete rethinking of production processes and, most importantly, finding new ways of creating products.

Luxury goods companies are making strategic partnerships with both experienced players in the digital field and with innovative startups to create new products and find alternative ways of improving services while reducing their environmental impact.

Innovation is the lever of change in the fashion and luxury industry. Indeed, the largest companies in the industry are sponsoring innovation competitions between startups and incubators, with the aim of promoting innovative practices and fueling the proliferation of new approaches to fashion. The ultimate goal is to become digital and sustainable by design.

The LVMH Innovation Award is open to startup companies that have been established within the past five years, are valued at less than US$100 million, have no more than 50 employees, and whose solutions are relevant to the challenges facing the Group and its brands. The finalists present their projects during the Viva Technology Show in Paris and a jury of digital experts appoints the winner. The winning startup receives support and advice from LVMH’s investment specialists and is rewarded with a partnership with LVMH brands. Since the launch of the initiative in 2017, startups that have won the LVMH Innovation Award are Heuritech (deep learning), Oyst (e-commerce solution), VeChain (blockchain), Kronos Care (post-purchase solution), 3D Look (trial experience), Crobox (customer behavior analysis), and Bambuser (live stream shopping).

In 2017 Kering became a founding partner of ‘Plug and Play—Fashion for Good ’accelerator’2 a collaboration with Fashion for Good and the C&A Foundation to support and accelerate sustainable innovation within the luxury goods and fashion industry. Other luxury goods companies subsequently joining the project are Chanel, Stella McCartney, and PVH. Through the accelerator, new innovative startups are identified and supported in scaling up their technologies, methodologies, and business models. The aim is to stimulate disruptive innovation and foster the adoption of sustainable practices.

The Prada Group entered a three-year collaboration with Startupbootcamp, the largest European network of multi-corporate backed accelerators helping startups scale up internationally. This collaboration led to the launch of a global innovation center in Milan, Fashion Tech—dedicated to the fashion industry where each year the ten most innovative startups are selected to receive support in building world-class products, services, and businesses. The aim is to find innovative solutions which address market challenges in marketing, retail, and the value chain.

Chanel has also been active in the field of startup collaborations. In 2018 it invested in Farfetch—an online fashion retail unicorn to ‘augment’ its boutiques and enhance the in-store experience. Chanel also partnered with the Finnish startup Sulapac, a producer of bio-plastics and bio-packaging to develop a sustainable biobased cap for the fragrance Les Eaux de Chanel.

In 2018 L’Oréal became the official sponsor of the exclusive beauty accelerator within STATION F, a 366,000-square-foot Parisian campus for startups. The accelerator involves up to 20 high-potential early-stage startups and encourages their development by providing them with strategic mentoring and operational support.

In March 2021 Estée Lauder partnered with Plug and Play, the world’s largest global innovation platform. The partnership aims to identify and support emerging brands and new business models with the goal of shaping the future of beauty and enhancing the consumer experience.