There’s nothing like a
brush with death to focus your attention.
The global economic
collapse has been like a brush with death for business. It has changed our
perspective and will have lasting aftereffects on our behavior. Last week I
read a report called “Responsible
Luxury” released by the World Jewelry
Confederation. The report
argued that because of the economic downturn, there are new motivating factors
behind consumer decision making. We have entered an era where consumers prefer
to buy products from a company with a good reputation for social
responsibility. The report also suggests that this turn of events will propel
companies in the distressed luxury market to adopt conscientious business
practices as the only option for survival.
This is good
news for the diamond industry, which has long been criticized for fueling
unrest, particularly in diamond-rich central
and western Africa. More to the point, it’s great news for the countless
families, communities, and countries ravaged by the effects of ‘conflict’ diamonds.
Influential industry brands are stepping up to support the
“responsible luxury” trend. Recently Tiffany
& Co., the world’s premier jeweler and the
gold standard (pun intended) of the luxury industry , stated that they
are actively embracing corporate social responsibility (CSR). As regards
large-scale mining, Tiffany pledges to strive to
source gemstones and precious metals from mines that operate at the highest
standards of social and environmental responsibility.
This is important
because Tiffany has a 19 percent share of the global
jewelry market. This move is sure to be a catalyst for change. What it means is
that Tiffany has the opportunity to set standards for best practices. Ethical
jewelry currently accounts for less than 1 percent of the $56 billion market in
annual jewelry sales. But when a revered brand like Tiffany
proactively engages in CSR, it is bound to have powerful cascading effects across
the entire luxury goods industry.
This is also
a smart business move for Tiffany, because consumers are becoming increasingly
conscientious about the origins of the products they buy. An excellent study on
this topic from Cone titled “Consumers
Like Companies With Cause,” states that causes help to convert new
customers and revealed that 83 percent of U.S. consumers have a more
positive image of a product or company when it supports a cause they care
about. What’s more, the study reveals that consumers are asking for
transparency; 90 percent of consumers surveyed confirmed that they want
companies to tell them about the ways in which they are supporting causes.
On the consumer behavior
front, 80 percent of Americans say they are likely to switch brands to buy a
product equal in price and quality from a company that supports a cause, and 19
percent will even buy a more expensive brand. This should be music to the ears
of the luxury goods companies, which desperately need to spark beleaguered
consumers to spend more this holiday season.
These are still early
days to demonstrate the inherent value of CSR from the perspectives of consumer
mindshare, market share, and profitability. It will take time for C-suite and
boardroom discussions to reevaluate a company’s social contract with the
environment and the communities in which they do business.
Still, I often talk
about CSR being a tsunami that will wash over business and change everything. I
firmly believe this is so. Tiffany is leading a big change by setting an
example in a little blue box.
Michael J. Kowalski,
Chairman and CEO of Tiffany & Co put it this way: “Tiffany & Co. is committed to crafting our jewelry
in ways that are socially and environmentally responsible. It is simply the
right thing to do: Our customers expect and deserve nothing less.”