Global luxury has been found out and it’s a huge opportunity for the UK’s 100% maker brands.
A chink has appeared in luxury fashion’s seemingly impenetrable armour. In stark black and white, a recent investigation by Milan prosecutors into local Italian factories found underpaid workers, often immigrants, who were in the country illegally, producing leather bags for some of the world’s most famous luxury brands.
Blowing the lid off designer brands’ margins and huge mark-ups, the documents state LVMH-owned Dior paid €53 per handbag to its suppliers, which it subsequently sold for €2,600. Armani paid €93 to the suppliers, further resold to the brand for €250, and subsequently priced around €1,800 in the brand’s designer stores.
In response to the allegation that a bag was sold for nearly 50 times what it paid a supplier, a Dior rebuke said: “Certain articles mention entirely false facts, firstly in indicating that the suppliers in question produced women’s handbags when they were solely participating in the partial assembly of men’s leather goods; and secondly that the production costs of these bags are ridiculously low. It should be noted that the profit margin of the house of Dior is entirely in line with that of the luxury industry and nothing of the order indicated by these erroneous comments.”
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“Entirely in line with that of the luxury industry” translates into “as bad as everybody else”, while still leaving consumers completely in the dark on the true costs. By not revealing the margins on its products, we can surmise how big they are.
What seems to be the case is that these luxury brands are not clear about what is happening through complicated and protracted supply chains. The brands have grown so big that they no longer own the factories they produce many of their goods in and have moved into product categories in which they don’t traditionally have any expertise.
Outsourcing always injects risks and the opportunity for suppliers to cut corners and not necessarily offer the high standards expected or communicated by premium brands. If these brands were aware they were paying these types of prices you’d hope it would raise a few eyebrows at head-office and questions on why. Brands always specify the materials used in products and will be forensically aware of all costs along the supply chain.
Ettinger accessories are Made in the UK
An embarrassment and a further headache for luxury brands already having to deal with a global downturn, this well publicised case has confirmed to many luxury consumers what they already suspected.
The ‘made in….’ label is often an after-thought for many luxury brands and offers no transparency for consumers paying a hefty premium. Here, there was a ‘made in Italy’ label, which makes this case even more worrying and raises more questions.
Like David slaying Goliath, this is a huge opportunity for the UK’s smaller, 100% maker brands to stand up against the luxury monopoly that has developed over recent years and say, “we make 100% of our product in our factory”. When consumers see the brand, they can be completely confident of how and where it was made.
The Private White V.C factory in Manchester
The UK still has some fabulous brands doing this. John Smedley (which recently re-opened its Derbyshire factory to third-party brands), Johnstons of Elgin, Bowhill & Elliott, Mackintosh, Globe-Trotter, Leathersmith of London, Ettinger, Cambridge Satchel, Swaine, Private White V.C., Crockett & Jones and Solovair are just a few.
There are many more, and now is the perfect time for them to make us totally aware of what they do. Many of these brands offer product far better than many designer brands at much lower prices. The scale of UK manufacturing is smaller, but it can be increased.
Less established brands who don’t have the luxury of their own production, and are making in the UK, should make it common practice to name their suppliers.
So many brands have the ‘made in’ section far down on the online description, or not at all, and it should be one of the biggest USPs of the brand and the product.
There is an opportunity to translate ‘Made in UK’ into, ‘we’re not ripping you off’, ‘we have the highest standards’ and ‘our product can stand its own against anything produced worldwide’. We’ve had ‘quiet luxury’, maybe it’s time for ‘honest luxury’?
John Smedley recently re-opened its Lea Mills, Derbyshire factory to third party brands
Brands need to say very clearly to consumers we are in control of 100% of our products. Some are frightened to speak up because they are suppliers to the bigger luxury brands and groups, while others are too busy making the product in order to survive to spend lots of time marketing and branding.
The crazy margins of the luxury giants are the reason they are so dominant and powerful. Now is an opportunity to stand up to the big boys and for smaller UK luxury brands to push back from the accepted global monopoly.
Main image: Johnstons of Elgin
