Bailing Out Luxury

With the start of Haute Couture Week in Paris, luxury is already on the ropes. Christian Lacroix is going under. Meanwhile, Prada and Armani are offering their brands to cell phone makers, televisions and cars.

Still, at the recent Financial Times Luxury Summit in Monaco, Bernard Arnault, chairman of the Moet Hennessy Louis Vuitton group, explained how the glut of luxury goods on the market was driving down costs and thus stimulating demand. And, as Marc Jacobs shoes sell for the same price as Loomstate at Target, more folks will choose champagne and caviar dreams. Or, as Arnault put it: "We don't buy our dreams at the supermarket."

However, this oversupply of luxury goods is not just the result of fewer spenders on Madison Avenue and Rodeo Drive. We, and our allies, are bailing out luxury.

We are offering government loans, grants and insurance to keep factories around the world over-producing luxury goods. Along with our allies, we are paying power bills, giving money to buyers to purchase these goods and bring them to market, and even building new factory towns from scratch to increase capacity.

This luxury bailout is making sure that artisan sewing jobs, supposedly essential to luxury manufacturing, do not return to Italy or Manhattan. In other words, we are keeping labor costs down overseas, making our own labor markets less competitive. We are also relaxing our legal rules, so that a purse made in China can wear a Made in Italy label by sewing on a strap in Europe.

Our fashion foreign policy is not just about what we wear abroad.

It is also about how we inject large amounts of money into fashion houses. As Louis Vuitton joins Citi, Chrysler and AIG, we should ask what public purpose is being served.

Comments

[behrlenyc]

Really this is MASS PRODUCTION that is being subsidized and passed off as "LUXURY"

To call it a "Luxury Bailout" is misnomer as the term "Luxury" has been completely
misappropriated and overused to market goods that simply are not... NOT Luxury, NOT Exclusive, NOT hand-crafted or made by artisans, and often not even good quality... but simply Mass Produced.

This is why skilled artisans jobs have left Manhattan, Italy and anywhere else they existed, no care has been taken to protect these highly skilled jobs, or to foster awareness of the skill, care, commitment and craftsmanship that is needed and does still exist in within some smaller, very specialized companies.

The push to outsource absolutely everything has done irreparable harm to the industry, and has lowered quality, standards and expectations across the board.

For years now, If an Italian company had it's leather goods made in Slovenia, they've been allowed to label it "Made in Italy". However, If a US company outsourced to the same maker - it must say "Made in Slovenia" Who do you think is going to be able to mark that item up (to wholesale) and market it as "Luxury" ?

So you have 500, 1000 (or more) pieces of a $2000 purse that anyone can purchase over the counter. (Most of which does not go into either the making or marketing of the product) Really, what is that?

Real Luxury encompasses a great, great deal more than the name on the label.

Carla Behrle
BehrleNYC

[wietog]

Luxury goods subsidy stat! Let's feed the hungry Prada shoes and LVMXI whatever the H that is handbags.