Dior supplier in Italy under fire for labour exploitation

[lani15]

I don't think so. I went by their boutique this weekend and it was still packed even with the knowledge many have of one of their bags possibly costing $57 in materials to make.

I feel like people are upset now and won't care (like all the other scandals) yet go back to buying their goods.

Same with the complaints about the price increases for many designer houses, yet people still shop there.

 

[Love Of My Life]

No. People will buy what they what from whatever designer brand in spite of whatever reports are
being shared & price increases.
There are many young wealthy world wide buyers who perhaps are new to the "luxury market"
& want designer merchandise, so this "news" may be of no interest in their buying habits now or in the future

 

[bellagiacca]

Since the laws were broken in Italy, making the story newsworthy, obviously Italy also has strict labour laws.

LVMH is also famous from a non-unionized workforce, the company was also targeted when the government raised the retirement age of French workers last year because it signifies inequality between workers and management.

What France has, is a tight-lipped media about violations that concern luxury (forecasted approx. $6.86B 2024 revenue to France). France's 2 largest companies are LVMH and Kering

The centre for leather-goods excellence has always been in Italy, which is why Louis XIV of France shoes were made by Italians.


This is LVMH's Code of Conduct. It's available in Chinese. Obviously, whether the illegal Chinese-owned factory was in Italy, or had they set it up in France it would still be illegal. Either way the Chinese owners 'forget' to read the Code of Conduct and LVMH/Dior 'forgot' to run checks. It would not have made any difference if the factory was in France.

Perhaps it's that the US people's crazy French fantasy cliché (more specifically Paris) that refuses to believe anything bad happens in France, luxury or otherwise.

I, for one, appreciate your repeated attempts to clarify this but I fear you may be tilting at windmills.

 

[keodi]

Since the laws were broken in Italy, making the story newsworthy, obviously Italy also has strict labour laws.

LVMH is also famous from a non-unionized workforce, the company was also targeted when the government raised the retirement age of French workers last year because it signifies inequality between workers and management.

What France has, is a tight-lipped media about violations that concern luxury (forecasted approx. $6.86B 2024 revenue to France). France's 2 largest companies are LVMH and Kering

The centre for leather-goods excellence has always been in Italy, which is why Louis XIV of France shoes were made by Italians.


This is LVMH's Code of Conduct. It's available in Chinese. Obviously, whether the illegal Chinese-owned factory was in Italy, or had they set it up in France it would still be illegal. Either way the Chinese owners 'forget' to read the Code of Conduct and LVMH/Dior 'forgot' to run checks. It would not have made any difference if the factory was in France.

Perhaps it's that the US people's crazy French fantasy cliché (more specifically Paris) that refuses to believe anything bad happens in France, luxury or otherwise.

I have always suspected this. thank you for saying the quiet part out loud.

 

[Misha333]

No. People will buy what they what from whatever designer brand in spite of whatever reports are
being shared & price increases.
There are many young wealthy world wide buyers who perhaps are new to the "luxury market"
& want designer merchandise, so this "news" may be of no interest in their buying habits now or in the future

I think you're right and some people will definitely keep buying no matter what, but some won't. I think it's a numbers game, from what we've seen with other scandals it's likely that significantly more people will keep on buying. I haven't looked at or considered a single item from Balenciaga after their pedo-themed scandal. A lot of people buy luxury to experience a certain emotion, not just to wear an item. I don't want to think about pedophiles or abused workers every time I reach into my closet. But then again, maybe we just don't know what's really happening with all other brands ... With the information available as of now, I'm not going to purchase anymore from Balenciaga or Dior.

 

[SPBiaes]

What do the young people often say online these days? “There is no ethical way to become a billionaire.” Can’t argue with that. To accumulate an unimaginable sum of wealth within a few decades in one’s lifetime, exploitation is bound to happen. With money, it comes power. The influence from these extremely powerful people and corporations will always come into play when it comes to damage control.

The emperor wears no clothes. With so many labor offenses from different brands such as Loro Piana, Dior, LV, Armani, Prada and the obviously declined quality from brands such as Chanel or Goyard, it is laughable to still think luxury brands are on the moral high ground comparing to fast fashion brands. Cutting down costs to generate more profit applies to both fast fashion AND designer brands. The lesser of two evils is still evil and the evil runs deep because it is all about human greed. The conscious consumers are trapped in a system that offers no alternative way after the bubble bursts, but the majority will likely just have their eyes and mouth covered (willingly or not).

 

[SDC2003]

I have always suspected this. thank you for saying the quiet part out loud.

some Americans may be fooled and believe in French fantasies but America is a diverse nation of people and we can’t be lumped into one category.

The French media may be tight lipped but what about others? No one is saying that there aren’t wrongdoings happening in the luxury sector in France but to what extent? Does France have minimum wages? Italy does not. Have there been slum conditions found at the luxury houses like Hermes and Chanel in France or goyard? safety mechanisms turned off? 16 hour shifts? Some americans like to see all the evidence and facts before making judgment. It may very well be that things are as egregious but let’s see the evidence. It can’t be in a ********ic society that corporations have that kind of control over the French media. What about the Italian or British or other media outlets?

As for how will these luxury houses do going forward? I think Dior will be impacted. Just Google Dior and there are so many news outlets talking about this and making fun of Dior. But doubt it will be for very long though who knows. People can be so flippant about trends. Look at Gucci and Burberry. No one is buying. I don’t think it will impact Lvmh broadly.

As for nouveau riche buying yes they will but so will those who just want a whiff of that luxury life. Luxury today isn’t like before where one cared about quality and durability and history. Today so much of it is about the flex. But there are a lot of people in the younger generation who aren’t doing as well as the older generations financially and otherwise. They’re struggling with a lot of things. And while the seem to have interest in luxury they seem much more interested in experiences. I think luxury will be on a downward trend. People today care more about how things are made too and about inequalities and worker rights.

 

[chanellover333]

Still no comment on this from Dior/LVMH execs or did I miss something?

 

[lani15]

Must be a small booktote

It was the book tote

 

[Seaquin]

This Revelation has woke many.
With LVMH sponsoring a big percentage for the Olympics, they would need ROI to cover their investments.
More price increases across the board progressively unlike Kering's YSL which seen a price decrease for their handbags.

 

[averagejoe]

This was originally from the Wall Street Journal, and it can be read fully on this news site:

Christian Dior’s $57 Handbags Have a Hidden Cost: Reputational Risk

Christian Dior’s $57 Handbags Have a Hidden Cost: Reputational Risk

kanebridgenews.com

Some quotes from the article:

Nipping the problem in the bud would require hundreds of millions of dollars worth of investment in new facilities to bring more manufacturing in-house. The alternative is for Dior to pay its suppliers more and keep them on a tighter leash. Either way, the result seems likely to be lower profits than shareholders have grown accustomed to.

I hope this actually changes the industry this way, or at least at Dior. Investing in more facilities like the one Fendi opened in Tuscany can bring more of the production in-house, and ensure ethical and legal labour practices are followed.


I like the cost breakdown provided here.

Bernstein analyst Luca Solca estimates that a €10 billion luxury fashion label, roughly Dior’s size, may spend just 23% of its sales on the raw materials and labour that go into its products. This implies a €2,600 Dior purse would cost €598 to make, equivalent to $US647 for a roughly $US2,800 product at current exchange rates.

In reality, the cost may be even lower, based on the results of the Italian investigation. The €53-a-piece assembly price it cited, equivalent to around $US57, didn’t include the cost of the leather and hardware, but that would add only another €150 or so, according to one Italian supplier.

Advertising fees are a further €156 per handbag, according to Bernstein’s analysis, and depreciation of the company’s assets is €156. Running the brand’s stores—including paying the rent on some of the most exclusive shopping streets in the world—and head-office costs come to an additional €390. This leaves €1,300 of pure operating profit for Dior, or a 50% margin.

“This is the reality of the business,” says Solca. “The retail price for the goods of major luxury brands is typically between eight and 12 times the cost of making the product.”

This price comparison is more balanced than the sensationalized "48x markup", which ignores a number of other costs.

 

[SDC2003]

50% margin is still enormous. They work on enormous margins compared to other retail brands. I get it’s luxury but it’s not what we all thought it was.

Frankly whenever I see Lvmh and kering brands now or anything made in Italy all I see is sweatshops. Celine lv Gucci Lori piana Bottega Dior - all of it just looks like cheap fast fashion. It doesn’t help right now that what they’re putting out there looks like recycled and cheap fast fashion. Some of the things I see Sa’s posting on insta are absolutely hideous. There are design issues as well at these fashion houses. Dior has a new bag out that looks like a speedy. How many times over has that been done? Boring. All of it boring, unimaginative and beyond that there are very real issues with sweatshops. People who continue to buy like all these people on YouTube or instagram just look incredibly cheap and ignorant. Like that Maria and then I saw Cassie who just did a video on Dior just buy something from Tiffany? Dior subsidiary did the bad deed but the blame imo goes to the very top. What is wrong with these people. Oh I know. Getting paid is more important than caring about other humans who are suffering. I wonder if Natalie Portman will step down or Charlize Theron - aren’t both of them very vocal about human rights related issues? Or is everyone just going to look the other way and say it’s a subcontractor issue. But it’s not really is it with a million Italians who work from home getting paid 1 euro a meter.

 

[Misha333]

50% margin might sound like a lot, but realistically this is the margin target minimum of most consumer goods and I'm not talking only about luxury (think a can of soup or an energy bar). When you want to launch a new product and present the proposal to leadership, you better have at least 50% margin or the chances to get a green light are slim unless it's a strategically important launch. I have worked in large corporate companies in various industries and that's the reality of it. Keep in mind that there are a lot of fixed costs of doing business, that need to be accounted for.

 

[SDC2003]

50% margin might sound like a lot, but realistically this is the margin target minimum of most consumer goods and I'm not talking only about luxury (think a can of soup or an energy bar). When you want to launch a new product and present the proposal to leadership, you better have at least 50% margin or the chances to get a green light are slim unless it's a strategically important launch. I have worked in large corporate companies in various industries and that's the reality of it. Keep in mind that there are a lot of fixed costs of doing business, that need to be accounted for.

There was an article recently on margins and many corporations actually don’t work with huge margins at fifty percent. Was it here that someone shared stats on margins with the major companies? I recall Nike margins being less than 20%

Edit- and it’s one thing to have a 50% margin on a pair of sneakers at 100 versus some 10k handbag. And we know so much of that money goes to marketing and wooing the vvips and runway shows. Maybe they could spend a little less money being so extravagant with the vvips. I mean isn’t having a safe exit route if there’s a fire or a working bathroom and soap kind of basic necessities. Getting paid minimum wage too and not working 16 hours in a sweat shop with no ac?

 

[Misha333]

There was an article recently on margins and many corporations actually don’t work with huge margins at fifty percent. Was it here that someone shared stats on margins with the major companies? I recall Nike margins being less than 20%

Edit- and it’s one thing to have a 50% margin on a pair of sneakers at 100 versus some 10k handbag. And we know so much of that money goes to marketing and wooing the vvips and runway shows. Maybe they could spend a little less money being so extravagant with the vvips.

It's public information for public companies, so you can check it for pretty much any company you're interested in. Nike's gross profit margin has been between 43-46% over the past 3 years.