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Luxury Brands and Corporate Citizenship: Paradoxical or Compatible?

Posted by: Dominik Prinz & Eric Morrison on Monday, October 15 2012 10:25 AM

Piggy BankOver the past two years, a curious trend has emerged amongst luxury brands.

Across Italy, numerous high-end fashion brands have championed efforts to restore cultural landmarks. In January 2011, Tod’s CEO Diego Della Valle pioneered the trend when he announced a $34 million donation to restore the Colosseum in exchange for advertising rights. More recently, Gucci and Prada have continued the trend by broadcasting their investments in historic landmarks across Venice in return for commercial retail rights.

Just as Italy’s consumer protection agency, Codacons, publicly challenged Tod’s role, many have responded to the brands’ initiatives with skepticism - questioning if the brands’ real intentions are purely “good” or rather calculated. Also, many wonder if this is a case of “good intentions gone bad” – especially if restoring cultural sites results in them being turned into high-end commercial stores that drive away local vendors.

Such attacks indicate multiple tensions; one amongst them is the inherent challenge that luxury brands face in undertaking corporate citizenship. How can brands predicated on premiums and status for the select few amongst us credibly give back to society at large? And does the exchange of funding for promotional rights undermine this effort after all?

Yet, the branded initiatives offer insight into how the luxury category can align corporate citizenship with the strategic objectives they have defined for their brands and business – as long as they take into account some critical considerations:

First, the brands need to be strategic in aligning themselves with such momentous real estate. By linking themselves to iconic cultural sites, brands like Tod’s, Gucci and Prada can emphasize relevant associations such as tradition, sophistication or exclusivity. But they also need to be cautious in pinning down their messaging. Once consumers get the impression that these efforts are merely driven by commercial self-interest, advocacy can quickly turn into skepticism and distrust.

Second, in working to preserve Italian heritage, brands have a chance to demonstrate “authenticity.” It is easy to identify the cultural and aesthetic synergies between such brands and their renovated sites. As Interbrand’s recent publication Meta-luxury: Brands and the Culture of Excellence argues, "Brands that have created value across generations are a valuable part of our culture." Yet, even on a tactical level, such brands recognize their own stakes in maintaining their nation’s architectural and cultural distinction, as “Made in Italy” claims and Italian roots in turn substantiate the brands’ premiums.

Ultimately, luxury brands can step up to take on parts of the responsibility that public institutions can’t always live up to in an age of public deficit and funding cuts.

If done right, luxury brands can demonstrate good Corporate Citizenship and close the gap between perception and performance. And they can venture beyond restoring important cultural heritage; they can restore consumers’ trust in a brand’s positive impact on society.

Eric Morrison is an Associate Strategy Consultant and Dominik Prinz is as an Associate Director of Strategy for Interbrand.




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