Luxury Under Fire: Brands Combatting Narratives
Caught in a social media firestorm, luxury brands scramble to defend their image and the value of their products.
There has always been a subset of the population that simply doesn’t see the value in luxury goods. “Why would someone ever spend thousands of dollars on (insert item here)?”; “I can get the same thing for a fraction of the price somewhere else”; “All you’re paying for is the logo.” The list goes on and on. There is some truth to it with examples of brands with either poor designs, like Balenciaga’s streetwear of late, or designer brands that cut corners only to reveal the wear and tear a few months after purchase. But with most high-end brands, you’re definitely getting what you pay for. Over the last few months we’ve seen viral videos on social media from manufactures in China claiming that they’re producing all of the luxury goods for the majority of your favorite aspirational companies. They’ve also taken it one step further to essentially offer a DTC model for you to contact them directly and they’ll ship you whatever you need for a fraction of the cost. This has caused public confusion, outrage, and an overall reevaluation of the value of luxury. It’s the latest hot topic that luxury brands are battling in a wave of discussions that consumers are having to evaluate if these clothes, shoes and bags are still worth the price tag.
“Made In” Monikers
I’ve previously discussed how the Made in Italy designation has been struggling to keep up for a number of reasons. It is important to note that there are legal thresholds companies need to meet in order to claim that a product is made there. Italian law offers a very strict definition. Law #135, article 16 that was established in 2009 states that “Goods classifiable as Made in Italy, must have been designed, processed and packaged exclusively in the Italian territory.” There are also regulatory bodies that can audit and certify companies are in good standing in adherence to this law. French law, however, tells a slightly different story as they’re significantly more lenient with regulations around Made in France. This law states that brands must “derive a significant part of its value from one or more manufacturing steps located in France” and “have undergone its last substantial transformation in France.1”. Knowing the stark difference between the two, the latter could theoretically succumb to loopholes if companies wanted to outsource various parts of the production process.
Perception Issues with the Manufacturing Process
I highly doubt anyone thinks that child exploitation is acceptable, much less worthy of deeming its output as “luxury.” The E.U. has gone out of its way to create more widespread laws to eradicate sweatshops, even going as far as placing blame on clothing companies for not doing enough diligence into the vendors they chose to partner with, but bad actors have continued. Last year Dior and Armani were both being investigated for working with manufactures accused of inhumane working conditions and low wages. Earlier this year, migrant workers for Z Production were protesting outside of Montblanc’s Geneva store after the brand cut ties with them for improving worker conditions and thus changed the output of the factory. Besides it being a horrendous thing to co-sign on, any dealings with child labor will dramatically reduce the strength and credibility of any luxury brand in the short and long term depending on how they handle these allegations.
What Could Brands Do Moving Forward?
Paul Argenti is regarded as one of the godfathers of crisis PR. Several years ago I had the opportunity to sit in on lecture at Dartmouth’s Tuck School of Business and he’s pretty incredible. When asked about potential options, “Being honest and open about stuff always makes a difference. It’s an approach that has worked for many different industries, thousands of times in lots of different venues.2” If companies don’t want release press statements on this specific topic, there’s another interesting route to take. We’ve seen a rise in process videos showing how brands make some of their most popular products and they’ve been well received. Gen-Z has proven time and time again that they demand transparency for the products they buy, which is further proof that more videos like these discussing the brand on a macro level could be beneficial, provided they don't reveal competitive advantages that risk marketshare leadership. There could also be more brand-led discussions around how their products are in so many secondhand stores and have stood the test of time from a quality standpoint. This might not be great for companies like LVMH who prefers that you buy directly from them, but might be a viable option for others.
My Observations and Thoughts
Personally I feel like there’s a bit of truth across the board. Late stage capitalism has reminded us that we should be weary of things company try to sell us and the narratives behind them. Plenty of our favorite large brands have, at some point, been in the hot seat for one problem or another. This discourse often overlooks a key question: in the context of luxury goods, should 'Made in China' automatically equate to lower value? Yes, they are one of the top countries to produce counterfeit items, but if these large companies have, in fact, contracted Chinese manufacturers, is that a bad thing? In comparison to all the luxury products available for purchase, VERY few items you see on shelves are handwoven/hand-stitched/hand crafted and these large brands have to meet a high level of global demand. If brands are still using high quality raw materials, complex stitching techniques, using natural ingredients for finishing techniques, etc., should we really downplay an item just because it’s not made in Europe? Finally, we must remember that if brands are outsourcing bags and other items, these contracts are probably worth millions of dollars. Do we really think reputable manufacturers are willing to risk a hefty lawsuit and an irreversible stain on their reputation just to try and go DTC when they don’t even have the digital infrastructure to do so? I think not.
Articles 22 to 26 of EU Regulation No. 2913/92 of 12 October 1992 and Articles 35 to 65 and Annexes 9 to 11 of EU Regulation No. 2454/93 of 2 July 1993
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