Beauty, luxury and sustainability: How logistics can deliver all three

For fashion houses, cosmetics companies, and the beauty and luxury industry as a whole, sustainability has become a key component of brand value. 

Customers now expect the environmental and social credentials of such products to be as elevated as their design, quality and presentation. Meeting these expectations requires the entire beauty and luxury supply chain, including third-party logistics operators, to be aligned.

Greater awareness about issues like climate change, social disadvantage and economic inequality have sensitised a generation of customers to the origins and values of the items they purchase. While this trend is being felt across the consumer goods sector, premium brands are feeling it most acutely.

“A few years ago, a top manager at one of the world’s largest cosmetics companies told me that 15% of their market capitalisation was due to the fact that they were considered pioneers in sustainability,” says Alexandre de Beaupuy, Development Director for health, beauty and luxury goods at FM Logistic. “Today, I assume it would be around 25% or even 30%.”

The giants of the beauty and luxury sector have raced to ensure they are not left behind by a wave of younger businesses that have built their brand identity around ecological and social sustainability. But as they have moved to make sustainability the core of their DNA, these brands have realised that they will also be held accountable for the behaviour of their suppliers. Indeed, Nancy Mahon, chief sustainability officer at The Estée Lauder Companies, has called sustainability “a team sport” that requires her company to use its scale to bring about meaningful change among its partners. 

Third-party logistics (3PL) specialists are key among those partners. De Beaupuy notes that major clients in the beauty sector weight sustainability as high as 20% in tender appraisals for logistics providers. And social impact is as much of a factor as environmental ones. 

“This means hitting targets for social inclusivity: ensuring that you hire people with disabilities, seniors who we help back to work, refugees, and other groups who may benefit from upskilling,” he says. 

He adds that FM Logistic works to ensure it is an inclusive company that pays a living wage, rather than a minimum wage, ensuring that its workers have the financial resources to meaningfully participate in society. The company uses external certification bodies to validate its efforts, allowing it to demonstrate its natural cultural alignment with the priorities of major businesses in the health, beauty and luxury sectors. 

Important though social impact is, environmental and decarbonising goals are often those that spring to mind when considering the 3PL industry, with modern beauty and luxury brands also requiring improvements in these areas. 

At both the warehousing and delivery level, one important approach to optimising carbon emissions is through the efficient use of available space within storage facilities as well as the transport fleet. According to de Beaupuy, although beauty and luxury companies are fiercely protective of their brands in the marketplace, most are content for their products to be stored and transported alongside those of their competitors, if it serves to reduce their carbon footprint through the logistics phase. 

FM Logistic has further enhanced carbon efficiency with its omnichannel approach, which involves handling B2B and B2C consignments from the same facilities, and retaining the dedicated picking and preparatory processes that each requires. 

In the beauty and luxury segment, the amplitude of demand peaks is pronounced around annual events such as Mother’s Day, Valentine’s Day, Christmas and Black Friday, but with B2B and B2C peaking at different times. By addressing both from the same platform, FM Logistic can spread the volume of work more evenly throughout the year, reducing the need for staffing surges and making optimal use of both main warehouses and urban micro-fulfillment centres, again with both carbon and financial savings.

A second factor particular to the beauty and luxury sector relates to last-mile deliveries. Soaring rents in famous luxury retail destinations, such as New York’s Madison Avenue and London’s Bond Street, have led retailers to downsize their storage floor space. 

This means they increasingly rely on rapid deliveries to those showrooms to meet in-store purchase demands. However, such fast deliveries reduce the ability of 3PL operators to consolidate multiple orders in one delivery, creating a tension between fast deliveries and green deliveries. 

FM Logistic is working to reconcile this tension. In urban areas it uses low-carbon vehicles for delivery, both to meet its own emissions targets and to impose tighter controls on vehicle emissions, including in key markets like Rome, where authorities have moved to protect historic buildings from vehicular pollution.

As for B2C deliveries, FM Logistic is working with the beauty and luxury sector to promote the idea of slower but greener deliveries to their clients. By ensuring that pricing for rapid deliveries reflects the carbon cost, 3PL providers can help consumers better understand the trade-off between speed and environmental efficiency. 

Reverse logistics must also be handled sustainably. These mostly apply to the fashion side of the beauty and luxury sector. Whereas destruction was once a common approach to prevent returned or excess stock from appearing on black or grey markets, this is no longer acceptable within a circular economy or even lawful in certain jurisdictions. 

Today, traceability is key. For items above a certain price point, FM Logistic applies a specific product process, including QR codes to ensure full visibility over products’ custody. This allows unsold or returned stock to be processed either for mainstream resale or re-directed to underprivileged communities at a discount, again in line with companies’ sustainability commitments.

According to de Beaupuy, such traceability could also be useful for end consumers. They can potentially use the same QR codes to assess the sustainability credentials of the goods they are purchasing, further enhancing brand loyalty in the beauty and luxury segment. 

This, he argues, will become even more important due to another trend: the customisation of beauty products. From products tailored for skin types to customisations around ingredients and packaging that can enhance their sustainability profile, the ability for customers to design, trace and take custody of their products will work to the advantage of 3PL operators who can enable this transparency. 

Finally, de Beaupuy points out that companies like FM Logistic have insights into the behaviour and preferences of end customers, and that beauty and luxury companies could take greater advantage of this data to support their sustainability and efficiency aims. 

“We can use our direct contact with partners and end-customers to analyse order profiles.  This means we can proactively help brands work at both the B2B and B2C levels to move from frequent and fragmented shipments to more sustainable, more consolidated ones, while giving them a better idea of their end-customers’ expectations.”