Wharton’s Stephanie Creary speaks with Kalpana Bagamane from Kering and Dr. Atira Charles from Moet Hennessy about how the luxury industry can become more inclusive.

A series of headline-grabbing missteps by high-fashion brands in recent years — for example, Dolce & Gabbana’s culturally offensive ads in China — set the luxury goods industry on a mission to self-correct a historic lack of diversity in its ranks.

The market has made a lot of progress in a short time by creating diversity councils, appointing chief diversity officers and developing special programs for underrepresented groups. The effort hasn’t gone unnoticed: In its second annual Diversity Leaders List, the Financial Times noted the leaps forward made by the industry as a whole and brands, such as Hermes and Giorgio Armani, in particular. But the very definition of luxury seems contrary to equality, raising questions about whether the industry can truly commit to the cause.

“I think it’s important to note that, by design, many luxury businesses are actually exclusive. That’s what we see in the media, that it’s something that only few people are supposed to touch,” Wharton management professor Stephanie Creary said. “So, it seems a little bit of a paradox that an exclusive industry can actually begin to embrace the principles of diversity, equity, and inclusion.”

Creary, who is a diversity and identity scholar, invited two luxury market executives to talk about the challenges in their field. Kalpana Bagamane is chief diversity, inclusion and talent officer at global luxury group Kering, whose brands include Gucci, Saint Laurent, and Balenciaga, and Dr. Atira Charles is head of inclusion, diversity, and equity for North America at Moet Hennessy, part of the LVMH luxury conglomerate. They joined Creary for her livestream series, Leading Diversity@Wharton. (Watch the video below.)

Defining Diversity Across Markets

The luxury industry has undergone enormous change, Bagamane said. She noted that consumers are evolving, the way brands speak and sell to consumers is changing, and younger generations are predicted to grow as segments. All of these changes impact how luxury approaches diversity and inclusion. E-commerce and social media have extended the reach of luxury brands to every corner of the globe. In fact, consumers in emerging markets are leading the growth of some brands.

“The industry is exclusive by product, but it should not be exclusive by identity.” –Dr. Atira Charles

“The world has become a lot larger, which I think has made luxury, instead of exclusive, more accessible and aspirational,” she said. “We’re trying to be more aspirational, which is more inclusive, and we want to meet the consumers where they are. The last thing we want to do is exclude people.”

Charles said sorting out the complexities of diversity is a “daily conversation” in the industry because it’s about more than just race and gender. Diversity means different things in different places for companies operating around the world. France, for example, has regulations that prohibit companies from addressing issues of race in the same way as companies in the United States.

“The industry is exclusive by product, but it should not be exclusive by identity,” she said. “Where it gets a little gray — and I think the industry is sorting this out — is how do we become inclusive by socioeconomics when, by definition, our price structure is high? And how do we also responsibly acknowledge that there is an intersection of things such as race and socioeconomic status? It really becomes this organizational dilemma that’s rooted in this larger societal dilemma.”

Charles acknowledged Moet Hennessy’s prominence in African American culture as an example. The brand, which was one of the first luxury products to advertise in Black-interest publications and last month bought a 50% stake in rapper Jay-Z’s champagne, has always “honored the community,” she said. But a different marketing strategy is called for in Asian countries, for example. Part of her executive role is to help the company navigate those nuances, both internally and externally.

“In this industry, we have to start to move from multicultural marketing to meaningful and purposeful engagement,” Charles said.

Bagamane noted that how we define diversity and raise awareness around its different dimensions is important if we want to see structural and behavioral change. She added that diversity takes on different meanings in a global context. In some places, it’s about cultural and ethnic background, but in others, it’s about sexual orientation, generation, or even personality (i.e. introverts versus extroverts). It comes back to the well-documented idea that more diverse teams are more innovative.

“If creativity and innovation are the heartbeat of this industry, then having diverse perspectives engaged in an inclusive environment will only strengthen that creativity and innovation,” she said.

The design of Bagamane’s role at Kering is unique because it ties talent to diversity and inclusion. This, along with a single-team structure, enables quick activation of DEI (diversity, equity, and inclusion) initiatives, from recruitment and training to listening sessions. Furthermore, this structure is designed to listen to regional input, adapting initiatives to ensure they are embraced by all markets, including Asia, Europe, and the U.S.

“Let’s start by raising awareness, by listening to each other. Let’s learn, let’s unlearn, let’s challenge our own thinking.” –Kalpana Bagamane

“We focus on internally changing the perspectives and behaviors of our colleagues, and that will come out externally,” Bagamane said. “Let’s start by raising awareness, by listening to each other. Let’s learn, let’s unlearn, let’s challenge our own thinking. We can’t solve problems that we don’t understand, and the only way to understand is to talk to people.”

Unique Barriers in the Luxury Market

Creary asked Charles and Bagamane to identify DEI challenges that are unique to the luxury industry, and their answers circled back to exclusivity. Charles said it’s important for people in her industry to push back on outdated ideas about who “fits,” noting that conformity in the luxury world isn’t necessarily about race or ethnicity or gender; it can be about socioeconomics, breeding and background.

Charles said she encourages the industry to look outside the usual recruiting pipeline. There may be a more diverse talent pool with transferrable skills elsewhere. Picking within the same exclusive industry is like “throwing a ping pong ball off the same wall. It’s not going to change. We have to start being more innovative in where we source our talent from,” she said.

Bagamane said she believes industry leaders want to do the right thing and do it fast, especially in a business accustomed to short cycles, yet change must come at the right pace. It takes time to undo biases that have been decades in the making and to build bridges of understanding. Moving too fast risks losing people along the journey, and losing people is something that cannot be risked.

“Changing behavior, especially behavior that’s been formed over decades of life, is time-consuming and difficult. You have to remain vigilant and tenacious and super patient,” she said. “I often say, ‘As long as tomorrow is better than today, we’re going in the right direction.”

Advice for the Next Generation

Creary asked Charles and Bagamane to offer their best advice to Wharton students who want to work as chief diversity officers, or who simply want to do their part in making their chosen fields more inclusive.

Charles warned them that DEI is hard, emotional work. Self-care and support help on the toughest days. “You have to have courage, you have to have conviction, but most importantly, you have to have the endurance,” she said. “This type of work can be very emotionally fatiguing.”

Bagamane stated that these roles require an enormous capability to influence. She also told the students not to over-plan, stay open to new experiences, and be courageous.

“The most important competency or the muscle to build is learning agility,” she said. “You have to learn how to learn, you have to learn how to unlearn, and make the unknown known.”