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Traceability in Luxury:
Harnessing B2B Relationships to Enhance Ethical Practices in the
Luxury Industry
Jonas Holmqvist*, Kedge Business School, France
Christian Kowalkowski, Linköping University, Sweden and Hanken School of Economics,
Finland
* Corresponding author: jonas.holmqvist@kedgebs.com
Holmqvist, J., & Kowalkowski, C. (2023). Traceability in luxury: Harnessing B2B
relationships to enhance ethical practices in the luxury industry. Industrial Marketing
Management, 111, 257-267.
https://doi.org/10.1016/j.indmarman.2023.04.008
Abstract
The luxury industry is a rapidly growing sector with several luxury conglomerates among the
world’s largest companies, and this growth is reflected in the increasing number of studies on
luxury research. However, most existing research focuses only on the consumer perspective
and overlooks the potential of B2B relationships for the luxury industry. This paper addresses
this research gap by developing how strong B2B relationships are crucial for an emerging key
topic in luxury, traceability. Specifically, we highlight the growing significance of traceability
in luxury supply chains and explain how it elevates the relevance of B2B relationships. We
further identify a dual purpose for traceability in luxury: it showcases ethical practices to
customers and highlights areas for improvement. We propose seven conceptual propositions
for luxury companies to improve ethical practices and enhance traceability through their B2B
relationships. Integrating extant research with managerial insights, we highlight the importance
of two new perspectives: managerial practices as well as B2B relationships as key cornerstones
to understanding and improving business ethics in the luxury industry.
Keywords: luxury industry, sustainability, ethics, traceability, supply chain, digitalization
Introduction
The luxury industry is a rapidly growing sector of the world economy. In the last two decades,
the luxury industry has experienced almost continuous growth, despite the setback caused by
the Covid-19 pandemic in 2020. Even in the face of economic uncertainty in 2022, the luxury
market grew by around 20% to reach an estimated overall retail sales values of €1.38 trillion
in 2022, and is projected to continue to expand throughout the decade up to 2030 (Bain & Co
2023). This strong performance of the luxury goods market is complemented by the rapid
growth of the luxury service sector, including luxury hospitality, fine dining, and luxury
tourism (Wirtz, Holmqvist, and Fritze 2020). Marketing research mirrors the growing
importance of this industry, with an increase in research into luxury and diverse definitions of
luxury (see Ko et al. 2019 and Wirtz et al. 2020 for comprehensive reviews).
However, even if business relationships with suppliers and resellers represent an important
part of the luxury industry, research into B2B relationships in luxury is missing from the
current literature. We address this gap in the literature by focusing on one emerging topic in
the luxury industry: the importance of traceability. In particular, we highlight the growing
significance of traceability in luxury supply chains (Brandao et al., 2021; Schmidt et al.,
2021) and explain how it elevates the relevance of B2B relationships. In order to study how
luxury brands could strengthen their ethical commitment through traceability in the supply
chain, we build on the extant literature and on managerial insights from the luxury field to
develop research propositions for how luxury companies can address ethical concerns while
adhering to traditional luxury codes, and how B2B relationships can facilitate this. For a
comprehensive overview, the paper addresses both the relationships that luxury brands have
with its suppliers and the relationships with its resellers. Furthermore, while the issues of
sustainable and ethics practices such as traceability are increasingly important for
manufacturers and service providers regardless of industry, we corroborate why they play a
pivotal role in luxury.
A rigorous approach to developing how the luxury industry can improve traceability
throughout the supply chain needs to consider the specificities of the luxury sector. The
literature on B2B marketing has seen an increasing number of studies on traceability in supply
chains (e.g., Anastasiadis et al., 2022; Paul et al., 2022). However, the luxury industry is often
considered vastly different from other industries, as highlighted by researchers in the luxury
field (Kapferer & Bastien, 2009; Wirtz et al., 2020). For example, rather than maximizing
product or service sales, companies in the luxury industry favor maintaining or strengthening
their exclusive image hence actively limiting the number of customers (Kapferer & Bastien
2012). As we identify in this paper, these differences extend to the role of traceability,
underlining the need to understand traceability in the luxury industry and B2B relationships
help develop it. We build on the five luxury dimensions of Ko et al. (2019, p. 406) to define
luxury as a product or a service that customers perceive to be of high quality, offer authentic
value, have a prestigious building of craftsmanship and/or service quality, worthy of a
premium price, and inspiring a deep connection with customers.
This paper focuses on the crucial role of sustainability in the rapidly expanding luxury
industry to study how luxury brands could benefit from key insights from the B2B sector. In
particular, we build on insights from industry managers on the importance of traceability to
develop how supplier relationships could help luxury brands improve traceability, and further
outline why luxury managers perceive that this is important.
In line with recent calls for more interdisciplinary research (Lindgreen, Di Benedetto,
Brodie, & Van der Borgh 2020; Markovic, Jaakkola, Lindgreen, & Di Benedetto, 2021), this
paper draws upon the luxury marketing literature and incorporate key insights from the B2B
literature to advance and develop the role of traceability in luxury. In the following section,
we provide an overview of current luxury research before describing our methodology. Then,
we explain the need for research into B2B relationships and ethical practices in luxury, and
present our seven research propositions. We conclude with theoretical implications and
research directions for B2B marketing, before offering actionable insights for marketing
managers.
2. The role of B2B insights into luxury
While luxury research has seen strong growth over the past years, including an increasing
number of studies on luxury in leading marketing journals (e.g., Bellezza & Berger, 2019;
Dion & Borraz, 2017), most of the extant literature focuses almost exclusively on consumer
perceptions and, when taking a firm-centric perspective, on business-to-consumer interaction.
This consumer perspective in luxury includes research on consumers’ conspicuous
consumption and status symbols (Han et al., 2010; Nunes et al., 2011), consumers’ use of
luxury as signals to their peers (Berger & Ward, 2010), consumer perceptions of luxury for
seduction and relationships (Sundie, Pandelaere, Lens & Warlop, 2020; Wang &
Griskevicius, 2014), as well as consumer attitudes to prestige brands (Joy et al., 2014; Ko et
al. 2019). Common to this wealth of research is that it looks only on consumer attitudes and
perceptions and, in addition, remains product focused as it mainly studies how consumers
relate to luxury goods.
Recently, the product-dominated perspective in luxury has been increasingly challenged by
calls for a wider understanding of luxury, emphasizing the need to extend luxury research
beyond this product focus. These new perspectives include research into luxury services
(Holmqvist, Visconti, Grönroos, Guais & Kessous, 2020b; Wirtz et al., 2020), more
accessible luxury as a means to enrich everyday life (Holmqvist, Diaz Ruiz & Peñaloza, 2020;
von Wallpach, Hemetsberger, Thomsen & Belk, 2020), and luxury as a consumer experience
(Thomsen et al., 2020). While this recent research moves luxury away from purely looking at
consumer products to understand consumers’ lived experiences around luxury, it still
represents a consumer-focused perspective in which managerial practices and the potential
benefits of B2B relationships in the luxury industry remain largely neglected.
In this paper, we recognize the importance of existing luxury research on brands and
consumers but argue that luxury research would benefit from a more complete picture of the
entire luxury industry, particularly an increased focus on the key roles of managers and of
B2B relationships in the luxury field. This lack of research into B2B marketing in the field of
luxury is all the more surprising as it stands in stark contrast to the realities of the luxury
sector, where B2B relationships are pivotal for addressing issues such as the growing
importance of traceability in supply chains (Brandao et al., 2021; Schmidt et al., 2021).
We next describe our methodological approach before moving on to developing our
propositions for how B2B matters in the luxury industry. In particular, we combine the focus
on ethical practices in luxury with B2B research to make the case for why luxury research
needs to move beyond the current focus on end-consumers.
3. Methodological approach
Conceptual research in the business-to-business field can build on literature reviews as
well as on empirical insights (Lindgreen, Di Benedetto, Brodie & Jaakkola, 2021), and we
employ both methods in this paper. In order to develop propositions relevant for both B2B
relationships and luxury research, we first reviewed extant literatures, in line with
recommendations for research spanning different fields (Holmqvist & Diaz Ruiz, 2018).
Recognizing the relevance of empirical insights in conceptual pieces (Lindgreen et al. 2020),
we build on recommendations in extant luxury research to anchor conceptual research
propositions in empirical practice through collecting managerial insights (cf., Holmqvist,
Wirtz & Fritze 2020). For these empirical insights on the role of B2B relationships, and
consistent with established practices on taking empirical evidence into account to derive
conclusions for theoretical advancement (MacInnis, 2011; Payne, Storbacka & Frow 2008),
we contacted key decision makers in different luxury brands to discuss the roles of B2B
relationships in their firms. Our aim was to select participants directly involved in either
sustainability and/or supplier relationships within the luxury houses to uncover critical B2B
aspects of luxury related to ethics and sustainable practices We were able to visit the head
offices of eight leading luxury brands in the fields of luxury fashion, jewelry, perfume, wine
and spirits, as well as yachting to discuss with thirteen informants in the managerial teams of
these leading luxury brands (e.g., CEO, Sales Manager, CSR Officer, Purchasing Manager).
Discussions focused on how brands integrate sustainable practices, in particular practices
related to traceability, as well as the role of supply chains actors in this process. Interviews
lasted approximately one to two hours. Several managers spoke on the condition of
confidentiality
1
; while company policies hindered us from recording the interviews, we could
take extensive field notes during each interview. In line with extant research practice in
luxury, we do not quote managers or provide demographic details; as pointed out by
Holmqvist, Wirtz and Fritze (2020, p. 748), “The managerial teams of top luxury brands are
often small and form close circles in which already the brand name and the position might
identify a respondent.” We carefully elaborated our sample using the following theoretical
sampling criteria: (1) luxury brands that are global market leaders within their industry sector;
(2) access to key respondents responsible for managing relations with external stakeholders or
sustainability initiatives; and (3) companies representing a wide range of luxury industries to
increase confidence in the transferability of findings.
1
While we are not able to name the luxury companies for confidentiality reasons, we have communicated to the
EIC and the reviewers all the companies in which we conducted interviews.
Next, following a discovery-oriented approach, we performed open coding to identify key
issues and themes. Employing the criteria suggested by Tuli et al. (2007) and Ulaga and
Reinartz (2011), we leant on three main indicators for deriving categories from our initial
analysis: (1) whether an insight can be relevant beyond a very specific luxury context; (2)
whether several informants provided an insight; and (3) whether an insight provided
interesting and useful conclusions beyond the obvious. We combined these insights from our
managerial interviews with our horizontal literature review to triangulate our propositions as
is recommended for interpretative research (Spiggle, 1994).
4. Implications of the specificities of the luxury industry
The luxury industry, as compared to other businesses, has several unique characteristics
which sets it apart. Kapferer and Bastien (2012) define sixteen ‘anti-laws of luxury’ that set
traditional luxury radically apart from most other business practices. For example, Veblen’s
(1899) classic inverted price-demand curve shows that the demand for luxury goods increases
when the price goes up (see Wood, 1993) as a high price signals prestige (Parguel, Delécolle
& Valette-Florence, 2016). Hence, while sales volumes are low in comparison, profit margins
are generally significantly higher and final customers less price sensitive.
Another example is the fact that luxury brands actively want to limit the number of
customers, preferring to retain the exclusive image rather than maximizing sales. For instance,
luxury giants such as Dior and Hermès keep track of how many items they sell to temporarily
remove products that sell ‘too much’ to safeguard their exclusive image (Holmqvist et al.
2021). For suppliers and sub-contractors to luxury brands, this may have implication for both
sales strategy and customer relationship management. We recognize these specificities that set
luxury apart and argue that they also present a case for how B2B researchers need to approach
the luxury industry. Interestingly, as several managers in the luxury industry tell us, many of
their B2B relationships are close and long term. Compared to consumer markets, business
markets are characterized by fewer but deeper relationships (e.g., Webster, 1992). Hence,
these characteristics resemble those of specialized B2B industries such as life sciences and
materials sciences where there may only be a handful of customers (e.g., science labs) that
have close and long-term relationships.
Just as the luxury industry as a whole differ from other industries (Kapferer and Bastien
2011; Ko et al. 2019; Wirtz et al. 2020), we also find that traceability looks markedly different
in the luxury industry. For example, a CSR officer at a leading luxury brand told us how the
luxury industry does not benefit from the strong legal requirements of traceability in the food
industry. As he explained, the meat of an animal is traced meticulously all the way from the
farm until it reaches the end consumer. Luxury brands have been trying for years to
implement the same traceability for the leather as for the meat of the same animal; all the
technology already exists, so this would be possible to do, but as it is not legally required,
luxury brands have not been able to achieve it. As this example shows, issues in the supply
chain may hold luxury brands back even when they want to be more sustainable, and the way
forward is through closer collaboration with B2B partners.
4.1 The importance of ethical practices in luxury
Another key reason for why understanding business relationships are becoming more important
to the luxury industry relates to the growth of concerns about ethics and sustainability. Luxury
consumers are becoming increasingly concerned about sustainability (Winston 2016), broadly
defined as “meeting the needs of the present without compromising the ability of future
generations to meet their own needs” (United Nations Brundtland Commission, 1987, p. 16).
These concerns have led to increased pressure on luxury firms in recent years to act in a more
sustainable way (Kapferer & Michaut-Denizeau 2020). Many of these concerns relate less to
the luxury brands themselves than to issues further back in their supply lines. We hold that
understanding business relationships with both suppliers and resellers can help luxury brands
to become more transparent about their entire production process. This transparency would help
identify and improve any problematic practices in the supply chain, which is in both the
customers’ and the brands’ interest.
While issues such as ethics in marketing are not new (Bartels, 1967), they have become
more important and received more attention in recent decades among both consumers and
business actors. In particular, there has been growing emphasis on environmental
sustainability (Sharma et al., 2010) and ethics in the supply chain (Maloni & Brown, 2006;
Roberts, 2003). While these strategies and practices are (becoming) an integral part of B2B
marketing regardless of industry and market, we argue that they are also emerging as an
important part of the luxury industry (Osburg et al. 2021; Sipilä et al., 2021).
Osburg et al. (2021) highlights the growing importance of taking environmental
sustainability and ethical practices into account in the luxury industry. While luxury brands
long seemed rather unconcerned by communicating about sustainability (Joy et al. 2012), this
trend appears to be changing as luxury brands have started to become more concerned about
ethical practices (Winston 2016). As an example, between 2018 and 2022 major luxury
fashion brands such as Chanel, Gucci, Prada, Saint Laurent, and Versace all announced their
decision to stop using fur due to concerns about animal conditions. Similarly, in March 2022
virtually all major luxury brands pulled out of the Russian market in response to the Russian
invasion of Ukraine and donated large sums to help Ukrainians displaced by the war. As these
examples show, luxury firms are increasingly showing interest in both improving ethical
practices and communicating about sustainability (Kapferer & Michaut-Denizeau 2020).
Another reason for this expected development is the existence of a generational divide in
perceptions of luxury, in that younger consumers tend to perceive a much sharper
contradiction between the luxury industry and sustainable practices compared to previous
generations (Kapferer & Michaut-Denizeau 2020). This generational divide in attitudes to
ethics and sustainability represents an important challenge for the luxury industry; what is
more, the implications of these attitudes for luxury brands are set to grow given that
consumers from the Millennial generation together with the younger Gen-Z consumers will
represent the majority of luxury consumers by 2024 (Forbes 2019). As demands for
sustainable luxury grows, building strong and resilient supplier relationships will become a
key challenge for luxury brands to strengthen their ethical practices. In the following sections,
we integrate insights from the luxury and B2B literatures with managerial interviews to
develop seven conceptual research propositions for the luxury industry.
4.2 Propositions for relationships with suppliers
Based on our interviews with luxury managers, we find that brands increasingly recognize
that ethical issues represent a challenge for the entire industry, a development matched in
research by calls for more studies on the topic (Osburg et al. 2021). While the importance of
ethics is relevant for all aspects of the luxury sector, as well as for B2B in general, we propose
that concerns about ethical practices make it particularly important to understand the impact
of the B2B relationships in luxury, as many of the current challenges facing the luxury
industry arise less from the interactions with customers than from issues in the industry
relationships. In many cases, negative customer perceptions about luxury refer to problematic
practices further back in the supply chain, such as poor worker rights (Schultz et al., 2020) in
the luxury fashion and jewelry industries, and that these ethical issues in the supply chain of
luxury brands decrease customer perceptions of the brands themselves (Kapferer & Michaut-
Denizeau, 2020).
In order to address these negative perceptions, and potentially even turn them into positive
ones, luxury brands have to be able to work with their suppliers and sub-contractors to
eliminate unethical practices. We posit that this situation makes it particularly important to
understand the impact of industrial relationships on the luxury sector and constitute one
reason for why the current lack of research on B2B in luxury represents an important research
gap. In B2B marketing, mutual understanding and adaptation is regarded as a key factor for
successful inter-firm relationships (Hallén et al., 1991), especially when moving towards the
provision of more comprehensive solutions (Tuli et al., 2007). To address and avoid potential
tensions, business actors may need to employ various governance mechanisms (e.g., tools,
devices, and tactics) to address the disturbances that may emerge in the process (Colm et al.,
2020).
In one of their anti-laws of luxury, Kapferer and Bastien (2012) state that luxury brands
“do not look for cost reduction,” underlining instead how quality matters more than cost. As
the need for sustainable practices in all sectors increase (Winston 2016), our interviews help
us uncover how many luxury brands have started to consider sustainability, together with
quality, as more important than costs. In our conversations with several managers, we find a
strong dedication to building resilient relationships with suppliers and sub-contractors who
can ensure ethical practices rather than with those who can deliver at lower costs. For
example, an informant in charge of supplier relationships at a leading luxury brand in the
diamond industry tells us that they now require all suppliers to enable full traceability through
the entire line; if suppliers cannot guarantee this, the luxury brand will stop using the supplier.
We propose the following for further exploration:
Proposition 1: Compared to non-luxury brands, luxury brands put a stronger emphasis on
strong partnerships with suppliers based on ethical principles rather than costs.
While many perceived ethical problems in the luxury industry are both real and perceived
negatively by customers (Kapferer & Michaut-Denizeau, 2017), the visibility of luxury brands
mean that sometimes the luxury industry is negatively perceived even when its suppliers are
more ethical and sustainable (Joy et al., 2012). For example, many luxury brands use only
materials from sustainable suppliers such as organic farms, and avoid delocalizing to low-cost
countries, guaranteeing good working conditions and wages (Kapferer, 2015). While
recognizing the value of these sustainable initiatives that many luxury brands have taken with
their suppliers, we suggest that the luxury industry needs to be more transparent about such
practices and in particular that luxury brands could benefit from recent technological
advances to enable traceability not just of the luxury item itself but also of the materials used,
throughout the entire supply chain.
This situation highlights another way in which traceability in the luxury industry differs from
most other industries. Whereas most ‘normal’ fashion is manufactured in low-cost countries,
often using cheap and polluting material such as polyester, part of the core of luxury brands is
to manufacture in their country-of-origin and using high-quality material (Kapferer 2015). This
domestic production is key to the luxury brand’s heritage and brand image (Kapferer and
Bastien 2009), hence luxury brands can stand to gain more than other brands from enabling
traceability both to increase customer trust and further emphasize how the luxury brand is
different from most other non-luxury fashion brands through a more sustainable production
process.
In advancing the potential of traceability for ethical practices in luxury, we build on
existing research showing that it is important that customers can trace their purchases to
increase customer trust (Montecchi, Plangger & Etter, 2019). Adapting this situation to the
luxury industry, we propose that it is not enough for luxury brands to work with their
suppliers for more ethical practices. Instead, luxury brands also need to enable customers to
trace the items they purchase to be able to verify for themselves that there are no ethical issues
further back in the supply chain. The ISO 8402:1994 standards define traceability as “the
ability to trace the history, application, or location of an entity by means of recorded
information.” The importance of traceability has been highlighted in studies of such offerings
as food products (Abrahamsen et al., 2012; Engelseth, 2009) and fashion items (Guercini &
Runfola, 2009). In their study of traceability in the fashion industry, Guercini and Runfola
(2009) identify two key uses of traceability: (a) as a tool for inter-organizational control and
(b) as a tool for market power. While it can serve as a market power tool to enable customers
and other actors “to acquire knowledge on the origin and the “states” of realization of the
product,” it may also help the hub firm (e.g., the luxury brand) and other focal actors to exert
control in the supply chain.
While traceability already exists in many industries, we identify a paradoxical situation in
which traceability in luxury would seem particularly important for luxury brands, yet largely
missing. Both of these facts derive from the specificities of the luxury industry. On the one
hand, and in sharp contrast to fast fashion brands that mainly manufacture in low-cost
countries, luxury brand should never outsource production, as the expert craftsmanship and
the original production locations form an important part of the brand heritage and image
(Kapferer and Bastien 2009; Kapferer 2015). For this reason, it would seem particularly
important for luxury brands to enable customers to trace the production process. On the other
hand, the luxury industry is notoriously secretive and has remained unwilling to allow any
insight. As these two specificities of the luxury industry clash regarding traceability, until
recently the focus on secrecy dominated. However, we believe that this is changing; the
combination of increased ethical concerns and the positive potential impact of showing that
the production reflects the heritage of the brand (cf. Kapferer 2015) will likely shift the luxury
industry to embrace traceability.
As our interviews with luxury brands reveal, this is the exact approach they are
increasingly taking. As an example, one of the world’s most exclusive champagne houses is
currently working to implement ‘complete traceability’ to allow future customers to trace
each step of their champagne, from the farmers and harvesters through “every hand that
handled the grape,” even down to smaller details such as being able to trace the makers of
label on the bottle. In line with Guercini and Runfola (2009), we postulate that this meticulous
approach to traceability serves both customers, as a reassurance of the practices throughout
the supply chain, and the luxury brand itself as a means to control each step of the process.
Proposition 2: Compared to non-luxury brands, luxury brands work more actively with
suppliers to enable customers to trace the origins of their luxury items to increase trust in its
ethical practices.
We further posit that increased traceability could also benefit customer perceptions of
authenticity (i.e., the quality of being real or true). Authenticity is a key aspect of luxury
(Kapferer & Bastien, 2012), and one of the five defining luxury characteristics that Ko,
Costello and Taylor (2019) identify. An advantage of developing strong relationships with
suppliers and enable traceability in the supply chain is thus that it also helps the luxury brand
to raise consumer trust in the authenticity of the product. One of the most serious problems in
the luxury industry is the prevalence of counterfeit luxury items (Cesareo and Pastore, 2014).
Given the prestige of using luxury brands as a way to signal to others (Nunes et al., 2011),
many consumers turn to buying counterfeit fakes of leading luxury brands (Han et al., 2010).
This represents a serious problem for luxury brands, both because of direct loss of revenue
and because the prevalence of counterfeit products might make potential customers doubt the
authenticity of genuine products. However, if firms can take measures to increase consumer
trust in authenticity, this contributed to reducing the perceive risk and act as a form of
assurance of authenticity (Montecchi et al., 2019).
Recent research on digital luxury argues that luxury brands can use digital markers in
products to enhance the customer experience (Holmqvist et al., 2020). Extending this use of
digital technology, we find that some luxury brands have recently started to use digital tools
to combat fraud. For example, Italian luxury brands Valentino and Versace now include
digital codes in their fashion items to allow customers to trace the product and verify its
authenticity. Figure 1 shows an example of a Versace item with both a scannable QR code as
well as a code the customer can use online.
The use of the Internet is not without risks in the luxury sector, and one of the anti-laws
proposed by Kapferer and Bastien (2012) even hold that luxury brands should not sell on the
Internet. For example, to this day Chanel continues to refuse to sell fashion online, arguing
that the customer experience would suffer as ‘the spirit of Chanel can only be found in her
boutiques.’ However, we suggest that digitization can still be helpful for luxury brands in
other regards and propose that the use of digital technology to trace authenticity can reduce
perceived consumer risk. By close collaboration with their suppliers, luxury brands can enable
traceability to not only increase customer trust in the ethical aspect of the product, but also
reinforce the impression of quality material and further reduce perceived risk of buying
counterfeit goods. Another case in point is Swiss watch maker Ulysse Nardin, part of the
major luxury conglomerate Kering, which in partnership with French technology start-up
Woleet introduced an ownership certification anchored in a Bitcoin blockchain ledger as part
of after-sales service (see Figure 2). The technology allows fast and reliable proof of
ownership and authenticity and protects the intellectual property rights of the producer
(Godart et al., 2021). Whereas 27.5 million legitimate Swiss watches were exported in 2018,
the Federation of the Swiss Watch Industry estimated that 40 million counterfeit watches were
manufactured in China and sold globally (FHS, 2019). We summarize these observations in
the following proposition:
Proposition 3: By harnessing digital technologies to enhance traceability in the supply chain,
luxury brands can increase consumer trust in authenticity.
-- Figure 1 about here –
-- Figure 2 about here –
A third and final advantage of working closer with suppliers and technology providers to
enable customers to trace not only the final product but the material used concerns another of
the five defining characteristics of luxury (Ko et al. 2019); that is, the quality of the product.
The use of high-quality material (Joy et al. 2012) as well as expert craftsmanship (Kapferer &
Bastien 2012) are key parts of the prestige of luxury brands. For example, in order to produce
the best possible quality for their customers, high-end luxury fashion brands are highly
selective in choosing top-quality materials (Kapferer 2015), yet the end customer seldom has
the possibility to experience and verify this. Building on this situation, we posit that the role
of traceability could go beyond increasing customer trust in ethical practice and in the
authenticity of the luxury item to include making the quality and the origin of the material
used more visible. For example, when Prince Charles visited New Zealand, luxury tailor
Anderson & Sheppard at Savile Row worked together with its suppliers to make sure not only
that the wool in the bespoke suits they made for the visit came from New Zealand, but also to
be able to tell the prince from which farms the wool came. As this example shows, some
luxury brands can already offer traceability throughout the entire supply chain.
Today, various degrees of traceability are compulsory for products such as food (see e.g.,
the European Union’s General Food Law and US Food and Drug Administration’s Food
Traceability List). Increasingly, digital technology is being used (Yacoub & Castillo, 2021),
such as when Kvarøy Arctic, a major producer of Norwegian farmed salmon, uses IBM’s
blockchain platform to enhance the traceability of its salmon across the supply chain. Overall,
however, traceability is a non‐regulated quality cue, which means that it is solely upon the
business to decide whether to use it or not (Dimara & Skuras, 2003). While traceability entails
up-front implementation and on-going operating costs (Asioli, Boecker, & Canavari, 2014),
its benefits should be particularly attractive in markets where customers are not price
sensitive, as in the case of luxury (Kapferer & Bastien 2012). We hence propose that working
with business suppliers of high-quality materials to enable customer to trace all stages of the
production of the luxury item can help strengthen the perceived quality of the product, as
customers can verify the origins of the material used.
Proposition 4: By providing customers with the ability to trace the materials used in luxury
items throughout the supply chain, luxury brands can enhance the perceived quality of their
products and improve the overall customer experience.
While we identify several potential avenues for luxury brands to employ traceability, our
interviews with managers in the luxury sector also help uncover some potential risks that sets
sustainable practices in the luxury industry apart. Interestingly, in sharp contrast to many
other business sectors in which firms may even exaggerate their commitment to sustainable
practices (greenwashing; Delmas & Burbano, 2014), several luxury brands appear unwilling
to communicate about their sustainability practices to customers. For example, one of the
largest and most exclusive luxury fashion houses recently created an entire internal
department for traceability in order to further strengthen their sustainable practices. However,
the fashion house has hitherto chosen not to communicate about these practices; a manager in
the traceability department tells us that while they find many customers engaged in
sustainability, other customers appear to equate it with lower quality. Further corroboration of
this situation comes from a competitor who tells a similar story, revealing that even though
heavily engaged in sustainable practices, and in the process of developing several new
initiatives with suppliers, this other luxury house has also chosen not to communicate at all
about sustainability to its customers.
Based on these findings, we propose the existence of what we term greenconcealing, as the
opposite of greenwashing. Many luxury brands are reluctant to communicate about
sustainable practices such as traceability for fear of a customer backlash. These findings
provide more evidence for how luxury can often be almost opposite to other business sectors
(cf., Kapferer & Bastien 2012, Wirtz et al. 2020). Our interviews reveal that many luxury
brands, across different sectors, invest heavily in sustainable practices and work extensively
with their B2B partners to enhance sustainability. Similarly, we find that their own production
processes to be at the forefront of traceability and sustainability. For example, two different
champagne houses both tell us that they have completely ceased transporting their bottles by
plane and now exclusive use ships, to reduce their carbon footprint. Similarly, they are
working to develop new practices for cultivating grapes to reduce water use. However, just
like the fashion brands, the champagne houses also remain reluctant to communicate about
these practices out of fear that some customer segments will perceive these practices as
harming brand image. To underline this point, a fourth luxury brand tells us that when they
shared information about sustainable practices on social media, they were met by a backlash
from some consumer segments. Thus:
Proposition 5: Luxury brands often refrain from communicating about traceability and
sustainability, as they fear negative consequences to consumer perceptions of the brand image
and the perceived quality of their offerings.
4.3 Propositions for relationships with resellers and market selection
Managing business relationships with suppliers constitute an important challenge for luxury
brands, as outlined in the first five propositions. In addition to these relationships, an
important yet often overlooked B2B aspect of the luxury industry concerns the relationships
with resellers. In B2B markets, resellers and specialized dealers are means for expanding
product and service sales, gaining access to local markets, and enabling the firm to cover a
wider geographical territory without having to invest in and manage a local network internally
(Kowalkowski & Ulaga, 2017). Nonetheless, if a channel partner oversees customer
touchpoints, the supplier loses control and cannot directly manage the customer experience
(Witell et al., 2019). There is however great heterogeneity in terms of channel-partner
management and structure between companies and industries. Whereas a company such as
heavy equipment manufacturer Caterpillar operates through approximately fifty powerful
dealers, machinery manufacturer John Deere has over 2,000 dealers in the US alone. One
reason that relationships with resellers might often be overlooked in the extant luxury
literature is because of the importance of the luxury brand’s own boutiques (Dion & Arnould
2011; Dion & Borraz 2015). Luxury brands typically develop sumptuous brand boutiques
with an elaborate servicescape (Dion & Borraz 2015; Joy et al. 2014), in which the service
encounter is closely scripted by the brand in order to safeguard the luxury brand’s prestige
(Dion & Borraz 2017).
Given the importance of brand image, many luxury brands prefer to sell only in a select
few places (Kapferer & Bastien 2009; 2012), hence the use of resellers rarely feature in the
luxury literature. However, luxury is no longer just about haute-couture fashion, as more
affordable brand extensions represent a growing part of the luxury brands’ revenues
(Albrecht, Backhaus, Gurzki & Woisetschläger 2013). Traditional luxury fashion brands such
as Chanel, Dior, Givenchy, Saint Laurent, and many others sell their own cosmetics lines and
fragrance lines. Unlike their fashion items, these extended brands are also sold through
authorized retailers. This situation is similar to many industrial markets where firms operate
through a hybrid model, combining internal, direct sales and service channels with external
ones (Kowalkowski & Ulaga, 2017), although the motives for such a hybrid strategy may
differ.
While sales of extended luxury though third parties represent an important source of
revenue for luxury brands, they also represent a risk for brand image. In order to secure the
long-term success of the brand, the prestige of the brand image is more important for the
brand than an increase in sales (Holmqvist et al. 2021; Kapferer & Bastien 2012). Patrick
Thomas, former CEO of luxury giant Hermès sums up this situation by saying that “The
luxury industry is built on a paradox: the more desirable the brand becomes, the more it sells
but the more it sells, the less desirable it becomes.” This means that cultivating brand image is
an indispensable task for luxury brands. As Kapferer and Bastien (2009) point out, 'image is
everything' for luxury brands, explaining the luxury-anti law that luxury brands should not
prioritize cost reductions (Kapferer and Bastien 2012). We propose that this fact has
important implications for the B2B side of the luxury industry, as how luxury brands would
be more concerned about the impact of their brand image of the reseller than the potential
increase in profits. Following this discussion, we propose:
Proposition 6: In the luxury industry, avoiding negative long-term impacts on brand image is
prioritized over short-term profits; hence, luxury brands weigh additional profits of selling
through resellers against detrimental effects on brand image.
Luxury brands recognize the risks involved in selling luxury through resellers; managers
tell us how they closely monitor the relationships with its resellers in order not to undermine
the brand image. This is in stark contrast to many B2B businesses, such as consumables,
power tools, and truck tires, where manufacturers generally sell through many small and
independent multi-brand distributors and dealers. In such settings, a manufacturer has
generally limited knowledge about, and influence on, an intermediary’s sales and service
activities and touchpoints (e.g., Kowalkowski & Ulaga, 2017; Renault, Dalsace & Ulaga,
2010).
In sharp contrast, luxury brands go to great lengths to limit the number of resellers; in one
anti-law of luxury, Kapferer & Bastien (2012) state that luxury brands should only sell in a
few select places to safeguard their exclusive brand image. Our interviews with luxury brands
in different sectors confirm that this is the case, and further reveal that this practice of limited
reselling also allows the brands to exert extensive controls of the resellers they use. For
example, a manager for a leading cosmetics brand tells us how they regularly monitor both
their resellers stores and websites to ensure that their products are presented in a consistent
way corresponding to its brand image.
Closely related to the importance of ethical practices in B2B relationships with resellers is
the more general question of whether brands should take ethical aspects into consideration
when selecting both markets and business partners. Traditionally, many brands selected
markets based on profitability. However, we posit that the increasing concerns about ethics
have influenced many luxury brands to reconsider whether they should operate in all markets.
For example, following the Russian invasion of Ukraine in 2022, virtually all luxury brands
quickly withdrew from the lucrative Russian market, marking a clear case of brands pulling
out of a market for ethical reasons rather than profitability. Prior marketing literature
discusses several reasons for market exit, including unmet performance, competition, market
decline, product failure, lack of strategic fit, business-owner exit, and consolidation of
operations (Karakaya, 2000). However, to the best of our knowledge, ethical considerations
have not previously been recognized as a cause for market exit. Larger luxury conglomerates
such as LVMH (including Louis Vuitton, Dior, Givenchy, Fendi etc.) and Kering (Gucci,
Saint Laurent, Balenciaga, etc.) and independent luxury houses such as Hermès and Prada had
operated their own brand stores as well as partnerships with Russian malls. Similarly, the
luxury brands also suspended all online sales to Russia. Even with this unprecedented
withdrawal from a market, luxury brands came under some criticism for taking around a week
to reach the decision to withdraw. We thus hold that this situation illustrates two important,
and correlated changes: both that luxury brands are increasingly taking ethical consideration
into account in their business relationships, and that many of their customers are increasingly
demanding that they act ethically. We therefore propose:
Proposition 7: Luxury brands increasingly take ethical concerns into consideration when
selecting both markets and international resellers.
Discussion
What does the future hold for luxury, and how can luxury brands deal with the challenges
they are facing? We hold that part of the answer lies in a stronger focus on B2B relationships.
While the luxury industry keeps growing (Bain & Co., 2023), it faces increasing pressure
from its customers. Responding to managerial concerns in the luxury sector over future
directions, we identify a dilemma between trying to address concerns related to ethical
practices and sustainability (Kapferer & Michaut-Denizeau 2020) while simultaneously
satisfying the expectations of traditional luxury customers more concerned with aspects such
as quality and authenticity (cf. Ko et al. 2019; Wirtz et al. 2020). Nonetheless, we argue that
these concerns are not opposites, despite some customers perceiving them that way. Quite the
contrary, we find through our interviews that managers from across different luxury sectors
all agree that stronger sustainable practices also result in better quality offerings (see also
Kapferer 2015). However, thus far luxury brands have not succeeded in communicating how
sustainability results in better quality. We suggest that strong relationships with B2B partners
could help the luxury industry meet these challenges, and our seven propositions outline how
luxury brands could achieve this goal. Figure 3 illustrates our propositions for the luxury
industry supple chain; Table 1 provides an overview of our propositions, a summary of the
key research on which they build, managerial insights from the luxury industry to exemplify
each proposition, as well as suggestions for their implications for B2B research.
-- Figure 3 about here –
-- Table 1 about here –
We further believe that extant luxury research could stand to gain from looking at the
entire supply chain, and the importance of the B2B relationships in the industry, specifically
those between luxury brands and their suppliers and third-party resellers, in order to capture
the full extent of how the industry ecosystem matter for luxury brands. Such an all-
encompassing perspective would also serve to make luxury research more managerially
relevant.
Another reason for the increasing importance of strong B2B relationships in luxury
concerns consumers’ increased demand for traceability, linked both to ethical practices and
environmental sustainability, as well as to trust and authenticity. We posit that traceability in
the supply chain plays a dual role for ethical practices:
1. Traceability empowers luxury brands to communicate the ethical and sustainable
practices already in place within their industry to customers, such as the use of
sustainable materials, reliance on sustainable farms, and fair wages for skilled
personnel, rather than delocalizing to low-cost countries (Kapferer 2015). Despite these
positive practices being widely used, customers may not be aware of them. Through
traceability, customers can verify for themselves the ethical and sustainable nature of
the materials and production processes used in their luxury items, contrasting them
favorably with those in fast fashion.
2. Traceability not only enhances communication with customers but also enables luxury
brands to identify areas for improvement and enhance governance and quality. Many
luxury brands are eager to collaborate with suppliers to establish ethical practices
within their supply chain. With the aid of digital technology, traceability may help
these brands to pinpoint opportunities for improvement and achieve their goals.
We further posit that traceability has additional advantages for how customers perceive the
luxury brand. As many customers become more concerned about sustainability, they often
want to be assured that the raw materials in their products come from sustainable providers
(Kapferer, 2015). While traceability is an important issue in a growing number of markets,
several luxury fashion houses now go to great lengths to allow customers to trace the
garments of their clothes back to farm, sometimes even to the sheep (wool) or goats
(cashmere) from which the garment originated. For example, French luxury giant Dior assures
consumers all leather in their bags come from sustainable farming. This kind of assurance acts
as a guarantee of the quality of the leather, while also showing customers from where the
leather originates and that the suppliers that deliver the leather are sustainable farms.
As these examples show, strong relationships with suppliers and providing customers with
insight into origins of the material are key issues in the luxury industry yet almost completely
absent from current research with its strong consumer focus. Similarly, luxury brands need to
develop new partnerships with technology companies to be able to assure authenticity (e.g.,
proof of ownership) through digital means such as blockchain. Through the framework
developed in this paper, we attempt to highlight how a stronger focus on B2B relationships
could benefit the luxury industry, and we outline research directions to achieve this goal and
encourage further theory development.
Theoretical implications and future research directions
This paper studies traceability in the luxury industry, identifying both why traceability is
emerging as an increasingly important topic in luxury and how the specificities of the luxury
industry mean that several aspects of traceability in luxury differ. We address this situation by
drawing on the intersections between the luxury industry and B2B relationships to show how
luxury brands can benefit from improved traceability. In line with the feedback from industry
managers, we especially emphasize the crucial role of traceability in luxury as a potential
guarantee for both sustainable practices and for ensuring the quality and authenticity of luxury
products.
Through our examples, we show how this kind of traceability only becomes possible
through close relationships with the suppliers of luxury brands, including technology
providers. We aim to provide a foundation for future research into the luxury industry and the
importance of B2B relationships through our framework of research propositions. These
propositions are conceptual in nature but build on examples and insights from key actors in
the luxury industry. They add to the current literature by helping to conceptualize the different
ways in which luxury brands can benefit from strengthening and incorporating their
relationships with supplies and resellers in their brand strategy. In addition, the focus on how
B2B relationships can increase transparency and traceability in the supply chain further add to
the extant literature by responding to calls for more research into ethics in luxury (Osburg et
al. 2021).
Our focus on B2B in the luxury industry is limited to traceability, yet we believe the
framework could serves as a basis for the further exploration of luxury research in B2B.
While this paper focuses on the role of B2B relationships with suppliers and resellers, with a
focus on improving ethical practices such as traceability in the luxury industry, we believe a
forgotten aspect of the luxury industry are the B2B companies that sell luxury products to
other firms rather than to end consumers. This includes manufacturers of tailor-made bespoke
seating for First Class passengers who sell their seats to airlines, or leather, genuine wood,
and crafted items such as crystal gearshifts for luxury cars. While end-users of these items can
be either business professionals or private persons, the customers are major airlines, private
jet manufacturers, or car manufacturers. In advancing the case for more research into the role
of B2B in luxury, we believe that future research into these B2B relationships would prove
fruitful research avenues.
Managerial implications
This paper responds to a call from managers within the luxury industry that research into
traceability in luxury is urgently needed; during the pre-stages of our research project, several
luxury managers highlighted the lack of insights into the topic. Accordingly, our conceptual
paper advances the relevance of B2B relationships in the supply chain to improve traceability
practices. For managers in the luxury industry, the propositions in this paper identify several
different practices that luxury brands could adopt to simultaneously strengthen consumer
confidence in the quality and the authenticity of luxury offerings, and to ease consumer
concerns about potential unethical practices. At a time where many leading fast-fashion
brands face increasing criticism over both working conditions and pollution, luxury firms
could benefit from communicating more clearly about how the production of luxury items
tend to be both more sustainable and ethical (cf., Joy et al., 2012; Kapferer, 2015). We
suggest that many customers are currently unaware of the extent to which the luxury industry
resists outsourcing and low-cost production, and instead insists on proper wages, local
production, and sustainable materials.
Our managerial insights from inside several luxury brands in different industries reveal a
complex and problematic situation regarding luxury brands' communication about traceability
and other sustainable practices. On one hand, many luxury brands go to great lengths to
implement sustainable practices; managers appeared genuinely passionate about sustainability
and are proud of the various sustainable internal practices they have put in place. For
example, LVMH publishes a detailed report of its commitment to sustainable practices
(LVMH, 2022). On the other hand, several brands also told us about negative pushback from
consumers. Here we uncover an important paradox in the luxury industry: instead of
greenwashing, we identity a practice of greenconcealing, where luxury brands engage a lot in
sustainable practices yet avoid communicating about it. Recognizing the complexity of this
situation, we propose sustainable practices in the luxury sector can have a dual impact. Some
consumer segments increasingly demand sustainable practices (see Kapferer & Michaut-
Denizeau 2020), as all managers also tell us, yet other segments seem openly critical of such
efforts.
According to one manager in a luxury fashion house, this situation appears to stem from
some consumers assuming that sustainability means reusing old material and perceive it to be
lower quality. In order to appeal to these opposite consumer reactions, we suggest that luxury
brands need to pay close attention to how they communicate about sustainability, and we
propose that luxury brands could emphasize how sustainable materials are usually of superior
quality (see Kapferer 2015). In the words of a leading luxury fashion house in the leather
industry: the better the animal is treated, the better the quality of the leather. In fact, many
luxury houses already use only leather and wool from sustainable farming yet remain
reluctant to communicate about this.
This reluctance to communicate on its own sustainable practices might be explained by
research showing that some consumers perceive products as less luxurious if the luxury
brands say they use sustainable materials (Dekhili, Achabo & Alharbi 2019). However, we
argue that the current shift towards a younger demographic of luxury consumers who are
more sensible to sustainable practices may lead to increased pressure on luxury firms to act
responsibly (Kapferer & Michaut-Denizeau 2020). The propositions developed in this paper
identify concrete, managerially actionable practices that luxury brands can adopt by
cooperating with their B2B partners in order to increase not only consumer trust in traditional
aspects of luxury such as quality material and authenticity (cf., Ko et al. 2019), but also to
highlight the ethical and sustainable side of their production processes.
Furthermore, emphasizing the importance of B2B relationships, this study has implications
for product suppliers, sub-contractors, and service providers to luxury brands. Suppliers also
need to understand the changes in the market, such as changing consumer preferences and
demands, and what impact this has on the practices of luxury brands and requirements on
suppliers and other actors in the supply chain. Being able to provide not only consistent,
superior quality materials, products, and services but also help brands in their effort to ensure
traceability and authenticity can enable suppliers to foster stronger and longer-term customer
relationships. While the luxury industry has shown consistent and almost uninterrupted
growth for two decades, suppliers need to be aware that sales growth opportunities per market
and segment is limited as luxury brands deliberately keep volumes limited in order to
maintain their image. Hence, while such growth opportunities available in other industries
may be limited, there are other means through which suppliers can strengthen their
competitive advantage and build or maintain key supplier status.
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Figure 1. A luxury item with both a scannable QR code as well as a code the customer can
use online in order to verify the authenticity of the product.
Figure 2. Digital certificate of ownership for a luxury item with the “digital signature” stored
on the Bitcoin blockchain.
Figure 3. Luxury supply chain: research propositions and actors involved.
Suppliers
Suppliers
Suppliers
Luxury Firm
Resellers
Consumers
Technology
Partners
P1, P2
P3
P4
P5
P6, P7
Table 1. Research propositions and implications for B2B marketing.
Proposition
Conceptual foundations
Managerial insights
B2B implications
P1: Compared to non-
luxury brands, luxury
brands put a stronger
emphasis on strong
partnerships with suppliers
based on ethical principles
rather than costs.
Luxury brands should ‘not look for
cost reduction’ but instead
prioritize the long-term impact on
brand image (Kapferer & Bastien
(2012).
A luxury jewelry market leader
makes traceability a condition for
new supplier contracts,
prioritizing being able to trace
diamonds over potential cost-
savings.
For suppliers and sub-contractors of luxury
brands, ethics should be a guiding principle and
an integral part of their business. Ethics, rather
than cost cutting, should drive strategy. While
ethical behavior is paramount across industries
and market segments (e.g., Code of Conduct
requirements based on national legislation and
UN and ILO Conventions), it is generally an
order qualifier rather than an order winner.
P2: Compared to non-
luxury brands, luxury
brands work more actively
with suppliers to enable
customers to trace the
origins of their luxury items
to increase trust in its ethical
practices.
Being able to trace purchases both
increases customer trust
(Montecchi et al. 2019) and helps
the brand communicate its practices
(Guercini & Runfola 2009)
A luxury champagne house
introduces ‘complete traceability’
to enable customers to trace each
step from the farmers and
harvesters through production to
final delivery.
Firms in the luxury supply chain should
proactively work with customers and suppliers
to enable traceability. Unless necessary, long
and spatially dispersed supply chains should be
avoided.
P3: By harnessing digital
technologies to enhance
traceability in the supply
chain, luxury brands can
increase consumer trust in
authenticity.
Authenticity is key aspect to luxury
(Kapferer & Bastien 2012) and
counterfeits a major problem
(Cesareo & Pastore 2014). While
selling online can decrease
exclusivity (Kapferer & Bastien
2012), digital tools can be useful
verify authenticity of items.
Several luxury brands, such as
Italian fashion houses Valentino
and Versace include digital codes
in their fashion items to allow
customers to trace the product and
verify its authenticity.
Incumbent firms should harness digitalization
through collaboration with technology partners
in ways that increase customer trust without
negatively affecting the customer experience.
P4: By providing customers
with the ability to trace the
materials used in luxury
items throughout the supply
Luxury brands are highly selective
in choosing top-quality materials
(Ko et al. 2019) and tend to rely on
sustainable material (Kapferer
Some bespoke tailors enable
customers to learn the exact
location, farm and animal from
which the wool in their suits
Firms need to understand the quality
perceptions and expectations of end-users (i.e.,
consumers) and its implications for product
development and operations.
chain, luxury brands can
enhance the perceived
quality of their products and
improve the overall
customer experience.
2015) for increased quality.
Allowing customers to verify the
origin of the materials can increase
quality perceptions.
originate, hence personalizing the
fashion item for the customer.
P5: Luxury brands often
refrain from communicating
about traceability and
sustainability, as they fear
negative consequences to
consumer perceptions of the
brand image and the
perceived quality of their
offerings.
Luxury is often radically different
from other businesses (Kapferer &
Bastien 2012). For example, while
many firms engage in
greenwashing to exaggerate their
sustainable credentials (Delmas &
Burbano 2014), we find luxury
brands engaging in greenconcealing
According to several managers,
some customers still perceive
‘sustainable materials’ as inferior,
leading to many luxury brands
avoiding to communicate about
the sustainability of their
materials and practices.
Suppliers should communicate to their
customers (i.e., luxury brands) the effects of
their sustainable practices on the offering, and
cultivate their own image as a high-quality
supplier, even if this may not be conveyed to
consumers in the short term.
P6: In the luxury industry,
avoiding negative long-term
impacts on brand image is
prioritized over short-term
profits; hence, luxury brands
weigh additional profits of
selling through resellers
against detrimental effects
on brand image.
For luxury brands, brand image is
more important than an increase in
sales (Holmqvist et al. 2021;
Kapferer & Bastien 2012).
Prioritizing brand image over short-
term profits (Kapferer & Bastien
2012), luxury brands prefer to
avoid sales that would influence
brand image negatively.
The former CEO of Hermès stated
that “The luxury industry is built
on a paradox: the more desirable
the brand becomes, the more it
sells but the more it sells, the less
desirable it becomes.” Unlike
normal brands maximizing sales,
luxury brands limit resales to
preserve brand image.
Firms need to cultivate relationships with
resellers to gain depth understanding of their
strategies and practices, the alignment between
the two brands, and the effect on customer
experience and brand image. Adaptation from
the resellers’ side may be required.
P7: Luxury brands
increasingly take ethical
concerns into consideration
when selecting both markets
and international resellers.
Online ‘firestorms’, negative
publicity on social media, can
damage brand image (Herhausen et
al. 2019). In a global world, the
potential negative impact on brand
image from sales locations
(Kapferer & Bastien 2012) extends
to market selection.
In the immediate aftermath of the
Russian invasion of Ukraine in
2022, luxury brands voluntarily
closed their boutiques in Russia
and stopped sales to Russia of
their products through resellers,
despite this stand resulting in loss
of sales.
Firms should assess their dependence
(deliberate or unintentional) on specific
geographical markets and effects of various
potential force majeures and determine whether
this is congruent with their overall strategies.
