Royal Renewal: Royal Warrant Holders, Schadenfreude and Digitine
To receive a Royal Warrant in 2024 is a big deal. We are required to demonstrate a rigorous focus on acting for a sustainable future, supporting the country’s rural and farming communities and protecting the arts and heritage crafts, all things that are very close to our hearts at Fortnum’s.
Tom Athron, CEO of Fortnum and Mason
Source: LinkedIn
Royal Warrants
The first royal warrants from the King and Queen have been issued, signifying a prestigious recognition for select organisations. Royal warrants are granted to companies that provide goods or services to the royal household, and they include but are not limited to brands in the premium and luxury sectors. This year's announcement has generated significant interest, not only due to the prestige associated with the warrants but also because renewal is now said to be contingent upon the companies' sustainability credentials.
In total, 145 companies have retained their royal warrants, while others have reportedly lost theirs. The impact of being awarded a royal warrant is substantial for brands, as it allows them to position themselves as luxury or premium providers and potentially charge higher prices for their offerings. Estimates suggest that the economic value of holding a royal warrant is worth billions. Companies that receive a warrant are permitted to display the royal arms alongside their own branding, which serves as a powerful signal of quality and excellence to consumers.
Warrant Holders of note
Renewed warrants of interest have been granted to:
Company Strategy
Burberry ReBurberry
Cartier Cartier for Nature
Floris None
Fortnum and Mason Future Matters
Smythson None
Aston Martin Lagonda Racing Green
Bentley Beyond 100
Jaguar Land Rover Reimagine
Source: Unsplash- Joshua Lawrence
Revenue and Reporting
While sustainability efforts should not be pursued solely for the purpose of earning a royal warrant, it is evident that luxury companies must prioritise and invest in sustainable practices. Some larger companies have already made sustainability a central focus of their overall strategy, recognising its importance not only for the environment but also for their brand reputation and long-term success. However, smaller companies often face greater challenges in structuring operations in this way and communicating their sustainability goals. Instead of comprehensive sustainability reports, they may rely on self-declarations or seek recognition through certifications such as B Corp status or Positive Luxury's Butterfly Mark as observed with Flores and Smythson.
To provide a more meaningful analysis of companies' sustainability efforts, it would be beneficial to compare organisations within the same industry or revenue bracket. This approach would allow for a more accurate comparison of how companies with similar resources and challenges allocate funds and prioritise sustainability initiatives. This would extend to, examining the relationship between revenue, profit, sustainability investments and the commitment and progress made by companies of various sizes and across different sectors.
Sustainability reporting varies significantly among companies, with some demonstrating greater depth and commitment than others. Companies that create stand-alone Sustainability Reports, in addition to their Annual Reports, often provide more comprehensive and detailed information about their sustainability efforts. Among the notable brands mentioned above, Bentley and Aston Martin Lagonda stand out for their dedicated Sustainability Reports. In contrast, Cartier's sustainability performance is reported under its parent company, Richemont, which is a common practice in the luxury goods sector for brands owned by larger groups. However, this approach can lead to generalisation in reporting due to the burden of resources and the potential for duplication.
Source: Brand Websites
Larger companies typically have the advantage of implementing more extensive sustainability initiatives that align with their broader strategies. These initiatives are often better resourced, with teams comprising multiple specialisms. However, it can be argued that even these teams may be understaffed considering the scale and complexity of the work required to execute effective sustainability programs.
A significant threat to sustainability initiatives in the luxury sector is the softening revenue currently being reported. During economic downturns, people tend to slow down their purchases of large luxury items for two reasons: firstly, they become more cautious with their spending, and secondly, extravagance during such times is often perceived as out of touch and socially unacceptable. This shift in consumer behavior can put pressure on companies to prioritise short-term financial goals over long-term sustainability investments.
Burberry recently announced their revenue results showing a decline in revenue from £3,094m to £2,968m a 4% reduction. Luxury revenues have been softening for sometime and present the greatest risk to sustainability initiatives where sustainability has not been embedded into product and strategy. Burberry are still profitable and in 2020 refinanced their Revolving Credit Facility (RCF) to a £300m Sustainability Linked Loan to achieve their ambition to be Climate Positive by 2040.
Is a royal warrant alone enough to boost a brand’s revenue? Details of the impact of Royals being spotted wearing brands are well documented whether it’s increased traffic or selling out. In the comparison it can be seen that some brands perceive this to be enough but brands aiming for more modern cultural relevance engage in celebrity collaborations for short term campaigns or long term. This brings its own challenges which takes us to Schadenfreude and Digitine.
Burberry recently announced their revenue results, revealing a 4% reduction from £3,094m to £2,968m. The luxury sector has been experiencing a softening in revenues for some time, which presents a significant risk to sustainability initiatives, particularly when sustainability has not been fully integrated into a company's products and overall strategy. Despite the decline in revenue, Burberry remains profitable and, in 2020, refinanced their Revolving Credit Facility (RCF) to a £300m Sustainability Linked Loan. This move demonstrates their commitment to achieving their ambitious goal of becoming Climate Positive by 2040.
The question remains whether a royal warrant alone is sufficient to boost a brand's revenue. There are numerous well-documented instances of increased traffic and products selling out when members of the Royal Family are spotted wearing particular brands. In the comparison, it is evident that some brands consider a royal warrant to be enough to drive sales and enhance their reputation. However, brands that aim for more modern cultural relevance often engage in celebrity collaborations, either for short-term campaigns or long-term partnerships. While these collaborations can bring significant benefits, they also introduce their own set of challenges, which leads us to the concepts of Schadenfreude and Digitine.
Schadenfreude and Digitine
Schadenfreude, the joy derived from others' misfortunes, is particularly prevalent in the digital age, where public figures and brands face constant scrutiny. It's connected to cancel culture and may fuel "Eat the Rich" rhetoric, leading to viral backlash on social media. As brands navigate these complex dynamics, they must carefully consider strategies for maintaining relevance, driving revenue, and upholding their commitment to sustainability and social responsibility in an ever-changing landscape. Balancing core values, adapting to consumer expectations, and proactively addressing potential controversies are key to thriving in this environment.
The Met Gala was held on the 6th of May and is a cultural moment for fashion, arts, film and music communities as celebs display their creative outfits. It’s an extravagant display of the type of wealth and exclusivity that prompts activists to call out inequalities and to the earlier point extravagance during economic and social hardship is generally frowned upon. This is exactly what happened and a movement called Blockout was launched and according to the site it’s a “…complete list of all celebrities, businesses that support the genocide in Gaza…”.
According to Yahoo:
It was prompted by the backlash against content creator Haley Kalil, who used the viral “let them eat cake” TikTok sound from Marie Antoinette while interviewing celebrities outside the event. Her faux pas caused an uproar, causing people to make comparisons between the guests of the Met Gala and citizens of the Capitol in Suzanne Collins’ dystopian young adult fiction series, The Hunger Games.
More information about Marie Antoinette, the teenage French Queen, and the disputed "let them eat cake" phrase can be found in the provided link. According to the Smithsonian website, she ultimately met her fate on the guillotine.
The phenomenon of Digitine, also known as Digital Guillotine or Blockout2024, is a movement that aims to mass unfollow celebrities as a consequence for their perceived silence on the Israel-Hamas war. This action is intended to cause a significant drop in the celebrities' follower counts, effectively "guillotining" their digital presence. Digitine is a manifestation of the broader concepts of Schadenfreude, the "Eat the Rich" mentality, and Cancel Culture, where individuals face public backlash and loss of support for their actions or lack thereof.
Source: Google Trends
Source: Statista
The impact of events like Digitine on brands is significant because the celebrities they partner with can directly affect their reputation and success. When a celebrity is targeted by the movement and their name is released as someone to block, it undermines the very reason brands collaborate with them in the first place. Celebrities are chosen as brand partners due to their influence and ability to inspire admiration among their followers. However, if people no longer look up to or admire these celebrities, their capacity to effectively promote and positively impact the brands they represent is severely diminished.
Companies and celebrities alike are growing increasingly apprehensive about speaking out on social justice or political issues. However, the Edelman Trust Barometer has consistently indicated that businesses are trusted more than government or media, and as such, they are expected to take a leading role in addressing societal issues. The 'S' in ESG (Environmental, Social, and Governance) encompasses the social element, which focuses on how businesses impact and contribute to the communities they operate in as part of responsible business practices. Social justice is a crucial aspect of this that companies cannot afford to ignore if they wish to maintain the trust and support of their stakeholders and the public at large.
The Statista graph illustrates the primary reasons companies invest in sustainable marketing strategies, based on responses from marketers in selected European countries in July 2022. Notably, over 40% of the criteria listed relate to potential negative brand impact, such as preventing reputational damage, avoiding accusations of greenwashing, and mitigating the risk of negative media coverage. This data reinforces the importance of endorsements and partnerships in shaping a brand's image and reputation.
However, the graph also reveals the sometimes questionable motives behind companies' pursuit of sustainability. Rather than being driven by a genuine commitment to environmental and social responsibility, many companies appear to be primarily concerned with avoiding negative consequences. As a result, sustainability initiatives may become underfunded or deprioritised, as they are seen more as a defensive measure than a core value or strategic priority. This short-sighted approach can ultimately undermine the effectiveness and credibility of a company's sustainability efforts, as well as its overall brand reputation in the long run.
Strategy: How brands should respond
Increase transparency on websites and other customer touchpoints to build trust and demonstrate commitment to sustainability.
Integrate sustainability into the core of product development and overall business strategy, ensuring it is a fundamental consideration rather than an afterthought.
Provide tangible evidence of progress and commitment to sustainability through clear metrics, milestones, and achievements.
Invest in sustainability initiatives, particularly those that address pressing humanitarian crises, demonstrating a genuine concern for global issues.
Navigate social justice issues by finding a balanced approach; staying silent or partnering with controversial celebrities can damage brand reputation.
Recognise the collective power of netizens and the potential impact of the movements they initiate, as they can significantly influence public perception and brand success.
Sources:
https://news.sky.com/story/seven-companies-granted-royal-warrants-from-the-queen-so-how-much-could-their-price-premium-be-13134486
https://www.harpersbazaar.com/uk/fashion/fashion-news/a43802031/kate-effect-brands-worn-by-royals/
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https://www.smythson.com/uk/sustainability.html
https://www.florislondon.com/pages/sustainability-ethical-policies
https://www.fortnumandmason.com/media/fortnums/blogpost/pdf/Fortnum-Mason-Revised-Sustainability-Report-2023.pdf
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https://www.jaguarlandrover.com/annual-report-2023
https://www.burberryplc.com/news/financial/2024/preliminary-results-for-52-weeks-ended-30-march-2024
https://www.burberryplc.com/news/sustainability/2022/burberry-signs-p300m-sustainability-linked-loan-
https://uk.news.yahoo.com/blockout-2024-why-digital-guillotine-135430390.html
https://www.standard.co.uk/lifestyle/celebrity/blockout-celebrities-blocklist-digitine-digital-guillotine-israel-palestine-gaza-hamas-b1157950.html
https://uk.news.yahoo.com/blockout-2024-why-digital-guillotine-135430390.html
https://blockout2024.org
https://www.smithsonianmag.com/history/marie-antoinette-134629573/
https://www.edelman.com/trust/2023/trust-barometer
https://www.edelman.com/trust/2022-trust-barometer
