Giuseppe Gullo: Luxury becomes accelerator of sustainability

Giuseppe Gullo is a renowned specialist in luxury industry, corporate strategy and finance advisor, and expert at International Summer Campus of the Russian Academy of National Economy and Public Administration. This year, he also took part in the recently housed by the RANEPA annual Gaidar Forum in Moscow. Invest Foresight, the forum’s strategic media partner, met with Mr Gullo on the sidelines of the event which, in his opinion, “is a fantastic opportunity, a pre-Davos Forum which provides a deep Russia’s market overview and Russia’s viewpoints.”  

According to Giuseppe Gullo, “The luxury market in Russia is a booming one. Demand for luxury is a trans-sector driver for other industries. It was so in the past and will be so in the future. Luxury is a marker of a status, sort of castes within the humanity that we have worldwide. It’s a system or language of communicating with each other. It does create differentiation between people, yet it’s a system we need. Everybody is born naked, and we need to cover ourselves. It’s basic and ordinary things that we need first, but then comes the beginning of the difference between humans.”

“The troubles we have in the world mainly come from the climate change. Human activities caused a lot of changes in the nature and environment. The dramatic change impacts attitudes of the humans and the industries,” he believes. “The fashion industry, once not a sustainable industry, now becomes an accelerator of sustainable business because there is a new trend that all luxury brands respect, it is sustainability and recycling business, circular economy. We see electric cars rather than fuel engine cars. Everything is changing and luxury becomes accelerator of sustainability.”

Among the challenges fashion industry faces, brand protection is very important, though “Counterfeiting is a proof of a brand’s value in the market. Counterfeiters copy goods in a hope to do business. Yet ultimately that is an advertisement for the copied brand. Interestingly, new brands are not copied any more as they expand very fast in the market.”

Consumption habits and demands are never stable. As Mr Gullo noted, “Nowadays, one of the most important trends is ‘extreme green’; there are companies that produce non-washable clothes which can be used for a hundred days without washing – and thus respecting the environment. There are also companies that do recycling of plastic and companies involved with second hand items. Many startups of that kind are very successful and they are accelerators of sustainability. Besides, they meet the demands of the public.”

At the moment, we are witnessing a new situation when “People can exercise their control over the market through social media. Present-day market is dominated by Millennials or Z Generation who have great exposure in the internet and social media. They really control the market by setting new trends to follow, like sustainability and inclusivity. It’s an interesting phenomenon that influences industries and other groups of population. Look at Greta Thunberg, for instance. Everything today is more sustainable. No automotive brand will miss an opportunity to announce to the market that they are abandoning fuel engines and switching to electric carts. These Millennials and Z Generation have control of the market and the brands. As a result, there is some segmentation in the population. There is a younger population that utilizes social media and is much in the internet, and an older one, or that which is not much in line with the kind of new tendencies. And there is evidently a gap between the two, and the question is who among the younger generation can control the market and who is missing something,” Mr Gullo further explained. “Let’s turn to what happened to Dolce & Gabbana in the Chinese market. They lost Chinese market due to a short video of 60 seconds ridiculing Chinese culture by showing people eating pizza with chopsticks. In a second they saw a billion of bad reactions in social media. Subsequently, Chinese authorities cancelled D&G show in Shanghai. So who controls the brand – D&G or the audience of Millennials and Z Generation? Yet this is a democratic aspect of the social media impact. The luxury industry was in the past very traditional and conservative but then it completely changed that kind of attitude and became open, inclusive, with Millennials and Z Generation dictating the agenda to the big brands of the luxury industry. The impact of social media is impressive in sense that influencers and big brands set trends for their followers – and a big part of the market will follow the trend or the brand. But ultimately, it’s audience and consumers who set the directions for brands. For example, there are many influencers who set a trend and wear clothes or apparel of some brand – as audience prefers some influencers to others. This is the power of social media today.”

Fashion industry is nevertheless trying to keep up with the changing social environment. “Luxury industry used to be a very traditional one. Nowadays, a big group of companies in the luxury industry is more open to startups that are familiar with new things required for engagement of the customers. Some very successful startups involved with hitech trends don’t sell apparel but offer it for rent as some people enjoy having luxury things for just a few days and then return them. Some brands are engaged in production which requires a new system of involvement of hitech companies. This is something that is transforming a very stable and traditional industry of luxury – and it becomes accelerator of sustainability and support to hitech companies,” Mr Gullo added and stressed that “Social media have an ability and capability to offer opportunities to new brands, as well as to long-established brands, for entering new markets. There are many new brands that are doing very well in the global market including Russia. This is an opportunity offered by social media in taking advantage of what was once a trouble.”

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