Value creation in the sustainable luxury supply chain

Sustainability is a word that has recently been ‘in fashion’. In its wider definition, sustainability implies meeting the needs of today without compromising the resources of the future (Lacoste, 2016). It is equally used throughout disparate industries, companies, and brands, as well as to qualify desirable consumer behavior. Fashion and sustainability were for long considered incompatible (Jestratijevic, Rudd and Uanhoro, 2020). The call for climate action has been perceived as a challenge for the future of the fashion industry. Yet, in recent years, there has been a clear change of the mindset in the fashion industry to identify sustainability as one of the best opportunities to add value to brands while making a difference in the planet. High profile Non-Governmental Organisations (NGOs) such as Fashion Revolution have been at the forefront of disrupting the status quo in this area and forcing fashion companies and brands to provide greater transparency in their supply chain strategies (Garcia-Torres, Rey-Garcia, Sáenz, and Seuring-Stella, 2021).

Making the invisible visible has become a priority (Kotler, Pfoertsch, and Pförtsch, 2010), as sustainable Business-to-Business (B2B) textile suppliers contribute to improve the brand reputation of their customers. In many cases, the sustainable credentials are the competitive advantage that help companies make a final decision when trying to set a strategic agreement in terms of design, manufacturing, logistics and distribution. Some B2B textile brands, such as Logitex, sell their products to many different retail brands, that take advantage of their suppliers’ sustainable image to improve their brand equity. Despite its importance in creating the sustainable value of downstream brands, the role of the sustainable supplier brand has been neglected in the fashion academic literature (Saviolo and Borney, 2021). This research feels the gap by examining how the relationship between business stakeholders, when based on shared Corporate Social Responsibility objectives, fosters a competitive advantage to all parties, including supplier and customer. We contribute to the literature by investigating the different modes of collaboration and co-creation between a supplier and customers in order to create sustainable value.

To understand the mechanisms of sustainable value creation in the supply chain, we focus on the luxury fashion sector, a sector where the branded supply chain has become a strategic priority (Saviolo and Borney, 2021). Luxury fashion lines, in contrast to diffusion lines and mass-market, are characterized by manufacturing in smaller scale, locally, hand-made by craftsmen with a unique savoir-faire (Jestratijevic et al., 2020). Raw materials are often naturally scarce, and the final garment limited in quantity and of exceptional quality. Luxury makes the price; procurement and manufacturing justify it to customers. Notwithstanding, the luxury sector was for long pointed as one of the most polluting and least sustainable sectors (Carrigan, Moraes and McEachern, 2013). Over the last decade, it has started to improve its image by putting social and environmental responsibility firmly on the agenda. Hence, the importance of understanding how sustainable value is created along the luxury fashion supply chain (Towers, Perry, and Chen, 2013). Yet, the rare research on value co-creation in the luxury fashion sector has considered essentially two models of collaborations: first, ingredient branding and cobranding between Business-to-Consumer (B2C) brands, where brands endorse together a product or a service (Cheah, Zainol, and Phau, 2016; Moon and Sprott, 2016); second, value co-creation between a brand and its end-users in order to design products and/or communication campaigns (Choi, Ko, and Kim, 2016; Hughes, Bendoni, and Pehlivan, 2016; Koivisto and Mattila, 2020). We go further by examining how the interactions between a textile supplier, Harris Tweed Hebrides (HTH), and its business customers contribute to their respective sustainable brand value.

Methodology: The research method involves case study research, that proved effective in the development and testing of theory in marketing and operations management (Beverland and Lindgreen, 2010; Voss et al. 2002). Sustainable fashion is a contemporary phenomenon that is suitable to be explored through case studies (Seuring, 2005). Thus, we investigate sustainable brand value co-creation through the case of a British textile supplier Harris Tweed Hebrides.

In order to understand with depth how sustainability practices add value to brands, we selected a B2B brand that is a famous supplier of tweed textile to the fashion sector (fabric for furniture, clothes, shoes and accessories) and to the luxury sector (supplier of the most renowned designers and luxury brands in the world, from Chanel to Vivienne Westwood). Harris Tweed Hebrides, since its origin, has sustainability in its ethos; we explored how these sustainable practices are created, implemented and communicated, to be finally integrated into the customers’ brand strategy.

Interviews were conducted with three managers. In addition, we had built a long-term relationship with the company, that resulted in numerous informal interactions with the management team and visits to the company. The formal interviews, with a semi-structured design, intended to go deeper into several aspects of Harris Tweed Hebrides sustainable practices and interactions with their customers and other players in their supply chain. The interviews were taped (with permission) and transcribed. The themes that were addressed during the interviews were related to the selection of suppliers (values, quality standards, work conditions etc.), the insurance of sustainability credentials (environmental and social aspects), the collaboration, the co-creation, and the communication process between Harris Tweed and its customers. To identify deeper insights and triangulate the data, secondary evidences were collected and analyzed; business press articles, annual and sustainability reports, archival records complemented the interviews. We also conducted a netnography, following the corporate brand, and the management team on social media (LinkedIn and Instagram accounts, #HarrisTweed) for almost two years, from 2020 to 2022. LinkedIn and Instagram are both efficient social media for Business to Business fashion brands when implementing an inbound marketing strategy.

Results: The co-creation processes operate at three different levels in the luxury fashion sector. First, supplier and customer brands co-create their sustainable reputation. Customers manage their supply chain risks and protect their respectable image by transferring responsibility and empowering the supplier. The supplier is a guarantee to the transparency of the supply chain, and the sustainable credentials of their customers. The supplier has to nurture the brand sustainable associations and align its values and long-term goals with its customers. The brand should remain relevant for both customers and end-users, by integrating new technologies and improving its sustainable performance over time (Saviolo and Borney, 2021). The case HTH also puts forward the active role played by managers who champion sustainability and foster the sustainable image on social media, to both business customers and end-users.

Second, suppliers and customers co-create their respective brand narratives. HTH heritage and cultural meaning becomes the anchorage of the fashion brands’ storytelling (Hughes et al., 2016). For luxury brands, the supply chain has become the main protagonist of their storytelling and the testimony of their sustainability (Saviolo and Borney, 2021). HTH brings the business customer to the mill, to the factory, behind the scenes; in turn, fashion brands showcase the product journey from the mill to the catwalk. These collaborations with fashion brands cultivate suppliers’ storylines and are integrated into their heritage. These brand narratives facilitate the transfer of cultural meaning and authenticity (Cheah et al., 2016). It traces an emotional bond between the supplier, the customer and the end-user.

Third, suppliers and customers’ interactions are a source of brand innovation. Supplier insights are the origin of a creative blast and stimulate idea generation. HTH nurtures its Scottish heritage, dig in its archives, reinvents its story by collaborating with other stakeholders, young fashion designers, cultural icons, and consumer brands operating outside of luxury fashion. Under the impetus of customers and other stakeholders, they push their creative boundaries, implementing new technologies, improving processes. They go the extra mile that legitimates the brand relevance to the youngest generation of consumers (Yang et al., 2017). Ultimately, fashion items are fully endorsed by both supplier and customer, in an inbranding or cobranding mechanism that benefits the brand equity of both parties (Moon and Sprott, 2016; Uggla, 2017).

As detailed in the findings above, sustainability can only be sustained and nurtured if it makes economic sense and the ethos of the product is respected throughout the supply chain, right into the consumer end product. This sustainable approach feeds into all three identified collaborative areas as the sustainable credentials of the end product can engender storytelling opportunities as well as reputational gains and possible routes to innovation (in terms of processes, creation of garments and development of new materials). The relationship between the B2B supplier brand and the B2C customer brand has evolved from dependence to interdependence, in a process of brand self-expansion. And “our brand becomes their brand” (Margaret, OQC)