Lean into the Heritage
It’s time for luxury brands to define their purpose, deliver impact, and drive value
In the face of slowing post-pandemic spending and rising stakeholder expectations for sustainability, heritage-driven luxury brands have a unique advantage. While some may seize this opportunity to strategically drive value and stand out from the crowd, others will likely miss out.
Luxury brands often refer to their origin story to create value and substantiate their purpose. Terms such as “legendary history”, “heritage”, and “legacy” are cited nearly ubiquitously by leading Houses — DIOR, Louis Vuitton, Cartier, Hermès, Chanel, Rolex, to name just a few.
This strategy pays off: brands that leverage their heritage are performing better relative to both industry peers and across sectors.
In 2023, the only luxury brands that grew in brand value were the heritage-driven ones of Louis Vuitton, DIOR, and Chanel. By contrast, Balenciaga—which once replaced Gucci as the hottest brand in the world—fell dramatically as a result of ongoing controversies around its brand identity. As Pierre Mallevays, a partner at Stanhope Capital, noted: while Balenciaga may have created “some of the most striking moments in recent fashion history”, its creative direction had taken its brand image and “twisted it almost to the point of breaking”.
Even in the face of global crises, brands that lean into their heritage continue to perform better. The luxury brands that recovered the quickest and the best post-pandemic were those with strong heritage positioning. They’ve also proven to be more resilient to headwinds. For example, Kantar’s 2023 Top 10 Luxury Brands—all of which are iconic heritage brands—declined by only 5% in total brand value, compared to a 20% fall across the board (including within luxury and apparel) in the Global Top 100.
However, behind these brands sit their far more vulnerable corporations.
As post-pandemic growth begins to slow, there is a momentous wave of transformation sweeping through the luxury goods industry, and its effects are for now most visible at the corporate level. In reality, the corporations behind legendary heritage brands have become more vulnerable to changing expectations from both internal and external stakeholders.
Internally, the growing power of “activist investors” within the industry over the last few years has triggered a fundamental internal change for how luxury brands determine their strategies and conduct business. Brands can no longer afford to shirk principles of good governance and the dynamics of the marketplace. Even within the opaque management structures of the industry’s family-run empires, careful steps are being taken to enshrine the prioritization of corporate stability over brand identity. Substantial leadership shakeups across industry frontrunners— for instance, at Louis Vuitton, DIOR, and Prada— have set the stage for sweeping strategic changes within these iconic brands as fresh leadership teams seek to chart their own path for their brands’ futures.
Externally, the increased proportion of Millennial and Gen Z consumers driving global luxury sales has prompted brands to become more attuned to shifting consumer expectations. Almost two out of three millennial consumers are willing to spend more on a product if it comes from a sustainable or socially conscious brand. Beyond core consumers, global crises have also forced corporations with luxury brands to face societal tensions at large. This tension is perhaps most palpable from what we saw in April 2023 when LVMH’s headquarters were stormed by French pension reform protesters as the company’s share price reached an all-time high.
It is no longer possible for brands to ignore the realities of a world that sits outside of their own timeless legacies.
Increased stakeholder pressure has also reinvigorated the push for environmental sustainability and social impact. Whether it’s LVMH’s flagship LIFE 360, Kering’s Crafting Tomorrow’s Luxury, or Richemont’s We Craft the Future, luxury groups are investing heavily into ensuring that all brands within their respective portfolios activate on a shared philosophy of impact and sustainability. Brands must therefore align their activities to a broader corporate sustainability strategy grounded in objectives and measurable targets.
The push for a reformed corporate sustainability approach also comes at a time of increased scrutiny. Fashion brands are notoriously guilty of greenwashing, and regulators are making it clear that they cannot continue to go unchecked. Just a few months ago, the European Parliament set out to ban environmental claims on carbon neutrality based on carbon offsetting schemes. The regulatory implications this new legislation for all fashion brands would be immense; A 2021 report from Changing Markets Foundation found that as many as 59% of all environmental claims by European and UK fashion & luxury brands are misleading.
Fast fashion brands have already been penalized for promoting vaguely defined ‘sustainable collections’ such H&M’s Conscious Collection and Zara’s Join Life, respectively. While some luxury leaders, like Gucci and Burberry, took early note of the shifting landscape and have already transitioned away from misleading sustainability claims, the majority of the industry remains inert to this impending threat.
The message is clear to those who are paying attention: sustainability and social awareness within fashion can no longer be just a peripheral exercise.
Two months ago, DIOR’s Spring-Summer 2024 Show featured what can only be described as a watershed moment for the iconic brand’s strategy. Yet, it was hidden in plain sight. Behind the flashy LED screens displaying “blindingly obvious” feminist art statements and the collection’s overtly anti-sexist messaging, DIOR had discreetly rejected one of the fundamental pillars of its brand heritage.
Most who are familiar with Christian Dior Couture will know a bit about its 73-year history built around the New Look. However, fewer people may remember that the once revolutionary hourglass silhouette was meant to serve as a powerful enabler of societal change during World War II. In 1947, the silhouette was a radical departure from the norms of women’s fashion during a time of utilitarianism. Historians even suggest that Monsieur Dior’s audacious vision empowered women to radically embrace their femininity, express themselves more boldly, and openly challenge the social norms of the time.
Today, however, women’s empowerment looks profoundly different to what it was in the late 1940s. Even in 2023, less than 1% of women & girls live in a country with high women’s empowerment. It will take another 123 years to close the gender gap globally. Simply put, the radical symbolism and power of the hourglass silhouette holds little relevance to the movement for women’s empowerment today— a point that DIOR’s creative director, Maria Grazia Chiuri, explicitly recognizes.
On the face of it, Chiuri’s latest show builds on what has become her defining legacy at the House of bridging feminism and fashion. Yet, hidden behind Chiuri’s creative flair, the show’s collection is arguably also the boldest rejection of a fundamental pillar of DIOR’s brand heritage— Monsieur Dior’s creative legacy. In this marked departure from the brand’s historic positioning—rooted in the design codes of its founder—we are seeing an existential tension play out between a brand that has built its identity around the timelessness of its founder and the shifting social norms that create value for its stakeholders.
Activating on stakeholder issues through brand heritage is a strategic choice, and there’s no “one-size-fits-all” approach.
Though it remains to be seen whether the latest campaign marks a new chapter for its brand’s purpose, DIOR offers an illustrative example of how a luxury brand can authentically engage with relevant stakeholder issues whilst still creating value for the business.
In the same way that heritage can drive traditional brand value for luxury brands, it can also be used to strategically activate on impact. Leaning into heritage can enable a luxury brand to define the parameters of its purpose beyond its bottom line.
In doing so, decision-makers must answer some fundamental questions around their brand’s heritage and stakeholder priorities:
1. What does the brand focus on, or build into its identity, that enables it to bridge the timelessness of its heritage with immediate relevance to consumers & society?
The world is undergoing a complete cultural transformation, and brands will be required to act beyond what is needed for their bottom line. As such, luxury brands will need to create purpose-driven strategies by identifying issues that are not only aligned with their heritage but also relevant for consumers and other stakeholders.
One possible avenue to do this is through identifying a niche within a brand’s heritage and then consistently activating within that one space. For instance, Guerlain’s landmark “Women for Bees” Programme has allowed the brand to weave the cumulative impact of its sustainability initiatives into its brand identity story by intrinsically linking the survival of bees with the purpose of the brand.
Similarly, Gucci’s CHIME platform allows the brand to leverage both its distinctively “loud” visual identity and its instantly recognizable brand partners as drivers of its purpose in order to authentically activate on a range of social issues. It’s an approach that justifies the brand’s use of its trademark media strategy, which now works to create both value and impact.
On the other hand, as we saw with the case of DIOR above, the answer could also be through tactfully letting go of the parts of brand heritage that no longer resonate with what is happening around the world.
In all cases, the relevance of the selected issues to stakeholders, and the brand's ability to authentically engage in them will be the key measures for success.
2. Once a brand has identified the issues it wants to be focused on, how does it go about activating on them in a way that's authentic, not just to who it is but to who it wants to become?
While Maria Grazia Chiuri’s Spring-Summer 2024 show embedded the activation on a relevant social issue into one of the brand’s core business activities, some other luxury brands have notably taken a different approach.
When defining the parameters of impact, some brands have tapped into their convening power and corporate power to reach a larger target audience outside of their immediate ecosystem; Chanel funds community-led women’s empowerment projects in over 35 countries. Similarly, Cartier’s Women’s Initiative empowers early-stage women entrepreneurs around the world—notably in markets where it has virtually no brand presence. While these initiatives have little to do with their brands’ core businesses, consistent activations and measurable impact can earn them the credibility to expand the realm of possibilities of where they can authentically position themselves in ways that few others can.
Between these approaches, decision-makers will need to consider what is most aligned not only with the brand’s heritage but also with its future positioning and business priorities. A siloed approach to sustainability not only reduces the brand’s ability to leverage its social or environmental activations to drive value for the business but also misses out on the opportunity to combine brand, consumer, and corporate power to scale and expand the impact of its activities. In all cases, consistent activation is imperative in order to build brand credibility that can then be leveraged.
A more strategic approach would therefore be to consider the business case for all impact-driven activities to safeguard value creation and magnify impact over time. For example, Hermès’ multi-pillared sustainable development model explicitly ensures that all of the brand’s activities—both core and impact-driven— are tied to a coherent vision for the brand’s purpose, backed by measurable long-term targets.
3. Who plays what role?
Chiuri’s vocal and demonstrable departure from the long-enshrined norms of DIOR’s brand strategy demands a pertinent question: was the decision to do so purely a creative one or was it part of a larger strategic conversation that happened amongst key decision-makers of the brand?
While it remains unclear the extent to which Chiuri is responsible for this strategy, the implications of it are widespread. When it comes to driving brand purpose through heritage, everyone is ultimately responsible, and each organizational team has a role to play.
Creative teams hold the tension of the brand’s timelessness with its relevance to consumers. They are more attuned to the design codes of the brand and create products as well as experiences that result in gravitational pull for consumers. Corporate teams hold the tension around business value. They are responsible for reconciling stakeholder pressures with brand strategy & business development. Sustainability teams hold the tension around societal value. They have ownership of measuring the brand’s societal and environmental impacts in a manner that can be leveraged by other teams. Hence, the question is about the ways in which the creative, corporate, and sustainability teams can come together.
Ultimately, this becomes a question about shared ownership and collective responsibility over a brand’s heritage & purpose. Internal buy-in of the brand’s heritage and purpose is a fundamental requirement—and one of the most challenging hurdles to overcome—in creating an impact-driven strategy that will remain resilient in the face of changing internal and external pressures.
Heritage is certainly a driver of value when it comes to luxury brands. However, as the world undergoes a complete systems transformation, luxury brands will need to face a reckoning on the role(s) that they want to play in larger society. While some brands will seize the strategic opportunity to define their purpose by leaning into their heritage, others will likely wait until they are compelled to act by external pressures, thereby missing out on the opportunity to gain a competitive advantage through impact-driven value creation.
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Sanath Jaishankar is a Senior Strategist at Ananda Partners, a business strategy and collective action agency.
