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Can Luxury Businesses and Corporate Social Responsibility Co-exist?

  • 14th Aug 2020
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Can Luxury Businesses and Corporate Social Responsibility Co-exist?

As we know, the exquisite world of luxury stands for all things plush and exuberant. It is this grand appeal that attracts customers to make high end purchases and develop a close association with the brand- resulting in better sales and increased profitability.

Now, the same luxurious appeal that attracts affluent customers towards spending an exorbitant amount of money on these products turns in to a subject of debate when associated with the concept of Corporate Social Responsibility.

More often than not, the Luxury market has been linked with the pursuit of perfection. For example, when customers look at brands like Chanel or Rolex, the first thing they associate these products with is the fact that they are absolutely perfect- be it in terms of their rich design, production or overall appeal.

This vision of perfection is what often leads to clashes with the socio-economic image associated with the concept of CSR. Especially with people- specifically millennials, being extremely well-aware of their choices and contributing to the highest percentage of consumers within the luxury market, it is important to cater to consumer perception.

Researchers have found that aligning with CSR can reduce the brand value of a luxury business, eventually resulting in negative sales outcomes. This is because the association subliminally reduces the worth and value that consumers attach to these products.

While aligning a luxury brand with CSR can be diminishing in terms of the brands profitability, it is considered both an opportunity and conducive responsibility of the luxury industry to inculcate strong CSR practices and develop better strategies to fulfil the brands social and environmental awareness, as well as cater to the business as a whole.

This will not only help consumers see the ethical side of the luxury but also help them make more well-informed & environment friendly choices in the future.

Luxury companies can use well-designed strategies to enhance competitiveness and reinforce brand value.
Luana Carcano, Professor of Entrepreneurship and Strategy at University of Bocconi

It comes down to the managerial expertise within the company to initiate and implement these changes effectively while taking accountability for decisions regarding CSR of the brand.

The core idea is to maintain an effective balance between the appeal and ethics of a luxury business. The Profit-with-purpose strategy is a fairly new development within the luxury sector that not only helps brands to be sustainable in the long run but also helps them run as an efficient business.

For the foreseeable future, luxury brands must ensure to align with CSR practices that are in tandem with what the brand stands for. This will not only help with implementing strategies that stand true to the brand but will also help customers connect to the brand in a whole new light.


Neha Menon is a Post Graduate in Media and Communication from Manipal University Dubai with an immense passion for stories, writing, travel, music and art.Apart from being a Fashion and Brand enthusiast, she's a big believer in the idea of 'follow your heart and live life passionately'. A complete d... read more


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