Media stories can damage consumers’ trust in luxury brands, who may face allegations that include unethical working conditions or the mistreatment of animals. Criticism has also been levelled at some provocative advertising campaigns and celebrity endorsers who have caused offence.
The chart below, from WTW’s risk monitoring partner, Polecat, shows the volume, sentiment and impact of media coverage between January and October 2024 on the luxury brand sector.
Point 1 highlights an early indication in January 2024 of heightened risk in the working conditions peril with the release of a report by The Business & Human Rights Resource Centre highlighting fashion brands’ “failure to eradicate forced labour putting workers at heightened risk”.
Historically, fast-fashion has taken the larger share of voice on working conditions, but a shift had occurred in 2024, highlighted by points 2, 4 and 5 representing increased focus and investigation by European authorities regarding poor working conditions across the luxury sector.
For reference, points 3 and 6 relate to animal welfare and abuse issues.
Analysis of Media Coverage Impact on the Luxury Brand Sector (January - October 2024)
In an age when negative stories can quickly go viral on social media, companies need to be vigilant and proactive to protect their brand and reputation.
We’ve identified some of the key risks that luxury brands need to consider, along with mitigations that can help companies prevent a crisis and manage incidents sensitively if they do occur.
High profile cases have brought media attention to working conditions in luxury sector supply chains, with allegations of illegally hired workers, poor working conditions and wages that prioritise profit over worker welfare.
Analysis revealing how media focus on working conditions grew following reports of poor labor practices in the supply chains of luxury brands in 2024.
The charts above from Polecat shows how media focus on working conditions increased when news of poor working conditions in the supply chain of well-known luxury brands hit the headlines earlier this year and highlight a low level of risks detected from January with a major uptick in June.
Brands that own and govern their own factories can put measures in place to stop these practices, but for many brands, suppliers are contracted and subcontracted across the globe making it difficult to monitor and maintain good and ethical working practices.
Many luxury brands rely on partnerships with celebrities to promote products. Celebrity partnerships can yield significant benefits, but brands can suffer by association if a celebrity endorser is involved in a scandal or behaviour that goes against the brand’s core values.
Consumers and investors care about how brands address animal welfare as awareness of sustainability and ethical consumption grows. Activist groups have made allegations of luxury brands using wild animal skins and feathers, and exposed the mistreatment of animals at farms supplying some luxury brands.
The charts below from Polecat show how animal rights and animal welfare re-emerged as a theme in the media in September 2024 following an upsurge in activism on animal rights themes, including protests outside shops and disruptions of runway shows.
Analysis showing how animal rights and welfare resurfaced in media in September 2024, driven by increased activism, protests, and runway show disruptions.
While most brands are committed to improving animal welfare, they still need to make sure they uphold their commitments at every stage in their supply chain.
Brands needs to find fresh and creative ways to engage their audience and create an image that gets people talking and sets them apart. Advertising campaigns that are intended to be provocative and get people talking can cross a line into being offensive. Performative and tone-deaf marketing campaigns, especially regarding race, gender or culture, can result in widespread social media condemnation and accusations of cultural appropriation and greenwashing.
WTW has developed a holistic reputational risk management solution, which includes Polecat risk monitoring which tracks live sentiment, and offers insights into public opinion through analysis of social media, to help prevent negative publicity.
Our Reputational Risk Quantification measures likely damage if an incident does occur. Our crisis communications experts will help you manage the media during and after an event, with Reputational Crisis insurance to cover you for any loss of gross profit you suffer as a result. The solution also includes Reputational Risk Benchmarking to assess your resilience against reputation risk in the future. To find out more, please get in touch.
