What: Inflation is affecting the purchase of sustainable goods but luxury continues to grow.

Why it is important: Financial anxiety is a top concern in updated data released from Deloitte’s Global State of the Consumer Tracker project that explores consumer priorities on a monthly basis. Concerns about high prices were expressed by over 80% of respondents in both the US and the UK as of May.

Consumers skipped sustainable options as 41% deemed them too costly, 24% responded that sustainable products were not a priority, and 13% cited unwillingness to wait longer to obtain such products.

Even though inflated prices are a top concern worldwide, the luxury sector appears immune. American consulting firm Bain released that global luxury goods sales are set to rise at least 5% this year to 320 billion dollars in the conservative version of their estimation.

Luxury sales have remained strong during the pandemic recovery due to demand in Europe and the US. In 2021, the US was the single largest national luxury market, even as Forbes noted that luxury fashion brands like Louis Vuitton, Hermès, and Chanel raised prices substantially, without much consumer resistance thus far.

There are thousands of independent brands and emerging designers around the world operating more and more sustainably from inception: they source locally while supporting regional ecosystems, upcycle materials, use dyes with natural ingredients, produce less waste due to their size, represent a more diverse range of creators and workers, and yes, their items typically cost more than similar alternatives.

During the height of the pandemic in 2020, all businesses suffered setbacks as entire economies shut down, the independent brands, even faced bankruptcy. 40% of the members of the Council of Fashion Designers of America (CFDA) were brands worth under USD 1 million. In contrast, a brand like Chanel had an operating profit of USD 2.05 billion that year, even after a 41% decline from suspended operations.

If the world economy shrinks, it will likely be the less recognizable independent brands, the emerging talents of the industry who take the largest hit again, especially those, as indicated in the Global State of the Consumer Tracker, who use responsibly made materials with fewer environmental impacts that cost more, as all brands large and small are implored to do to reduce emissions.

Quality and sustainability have taken a backseat to the desirability of high price just for the sake of it. A study that focused on consumer motivations for accepting high luxury brand prices in both Western and Eastern cultures explained “Unexpectedly, the pursuit of high quality is not a driver. Instead, obtaining status and exclusivity is what moves buyers to justify the expense, not anything about the environment.“Price functions as a fee for the right to exhibit the logo of a well-known brand and co-brand oneself.”

Sustainable goods see decline due to high cost, yet luxury sales grow