Sweatshops, brand blacklists and bagflation
Dark Luxury's weekly news round-up
In this week’s Dark Luxury news round-up
The consequences of labour exploitation in the luxury supply chain - did Dior get off lightly?
The competition for designer outlet supremacy in the Cotswolds heats up
Gucci fails to tempt the super-rich - again
Could Chanel’s bad results herald the end of handbag price inflation?
How luxurious forms of travel are creating opportunities for people smugglers
Dior to pay €2 million for victims of labour exploitation
Dior, which is part of LVMH, has agreed to pay €2 million over five years to support initiatives aimed at helping victims of labour exploitation, after the Italian competition authority found that the luxury brand and two of its units misled customers with statements about working conditions at its suppliers. Dior will also amend its ethical and social responsibility statements and will strengthen its processes that go into selecting and monitoring suppliers. Employees, suppliers and subcontractors will also get some training. Italian consumer group Codacons said the settlement was too small. (AGCM)
Dark Luxury offer
We have some ambitious goals and we need more paid subscribers to help fund our journalism. We’re offering 20 per cent off annual subscriptions for the rest of May to celebrate passing 1,000 subscribers. We hope you’ll consider supporting us.
A reminder that this settlement follows an earlier investigation by prosecutors in Milan who discovered workshops where unpaid, often immigrant, workers were making leather bags for Dior and Armani, and who were living and sleeping in the workplace in order to give the managers the ability to make bags 24 hours a day. This allowed costs to be cut so drastically that the supplier was able to produce Dior handbags for as little as €53 each, according to investigators, which Dior then sold to consumers for €2,600 (that model number was reportedly PO312YKY). An Italian court put Manufactures Dior SRL, a subsidiary of LVMH, under a special administration regime in June 2024 after alleging it had sub-contracted work to Chinese-owned firms carrying out this work. The special regime was lifted in February.
Dior’s first pubic response to the investigation was to complain that the investigators had referenced the wrong type of bag, and to say “the profit margin of the house of Dior is entirely in line with that of the luxury industry”. The allegation by prosecutors was that violations like this are not one-off incidents, but are systematic because of the drive for profits. (Reuters)
In May, an Italian court placed Valentino Bags Lab Srl, a unit of Valentino, under judicial administration for a year after finding it had subcontracted production to Chinese-owned firms that exploited workers. Workers there were reportedly working day and night, producing handbags for between €35 and €75, which the brand sold for between €1,900 and €2,200.
Now read:
Brand blacklist is killing Leicester’s textile industry
Adjacent to the Dior, Armani and Valentino supplier investigations is Ed Conway’s story of how scandals about "sweatshop" labour conditions in a few specific clothes factories in Leicester ended up “triggering an implosion” of production in the city that once clothed the world. Instead of forcing brands to improve and help to ensure better conditions for workers who make their clothes, brands effectively blacklisted production in the city, leaving a once-thriving industry and employer of local people in terminal decline.
Making things worse, the decline happened at the same time as the rise in popularity of Chinese fast fashion brands Shein and Temu, which mostly make clothing outside of the UK. As Conway writes, “UKFT - Britain's fashion and textiles lobby group - has found that a staggering 95 per cent of clothes companies have either trimmed or completely eliminated clothes manufacturing in the UK”. (Sky News)
The Cotswolds Designer Outlet vs Bicester Village
Just as the UK’s Bicester Village celebrates its 30th birthday, a new, direct competitor has entered the fray for designer outlet supremacy in the Cotswolds. “The Cotswold Designer Outlet”, run by specialist retail destination operator Multi-Realm, could not have come at a tougher time for Bicester Village, with Chinese tourism to the UK in decline, a cost of living squeeze on “aspirational shoppers” who have traditionally been the prime market for designer bargains, and pressures created by the removal of tax-free shopping in the UK in 2021.
Bicester Village helped its operator Value Retail capitalise on the boom for designer outlet shopping over the last few decades, after a quiet launch in 1995 in what PR director Colin Woodhead who worked on the launch said was a “wet field in Oxfordshire”. Its picturesque location in the Cotswolds became fashionable, and its carefully curated selection of mega brands such as Gucci and Brunello Cuccinelli alongside more esoteric selections from brands as diverse as Missoni and Smythson, secured its place on the UK’s luxury shopping circuit.
Bicester Village’s dominance in the area is now under threat by the opening of the new Cotswold Designer Outlet, according to Glitz Paris. Industry sources told the publication that the new outlet’s “more accessible brand strategy” could draw customers away from Bicester. The Cotswold Designer Outlet, which opens in July, has a more mainstream offering with brands such as Tommy Hilfiger, Calvin Klein and BOSS. (Glitz.Paris)
The end of ‘bagflation’ at Chanel?
A weak set of results from Chanel with sales falling by four per cent has pundits wondering if this will herald the end of “bagflation”. Back Row’s Amy Odell reports that Chanel was responsible for some of the punchiest price increases in mass luxury as the brand raised prices on classic models such as its flap bag by as much as 86 per cent between 2019-2024, in a bid to be as expensive as rival Hermés. Even so, growth did not slow down during this period.
However, this year operating profits fell 30 per cent in 2024 to $4.5 billion, the first decline since 2020. Interestingly, the results showed strong performance across ready-to-wear, beauty and jewellery categories, as the brand, which currently has no creative director, awaits Matthieu Blazy’s first collection. This means that the drop in profits can be largely attributed to leather goods of which Blazy, who was previously at Bottega Veneta, is considered something of a magician. As our reporting into the market for pre-owned bags has shown, classic Chanel models are the rock solid, blue-chip stocks of the handbag world. Sabrina Sadiq, CEO of Luxury Promise, a reseller of pre-owned luxury bags, told Dark Luxury: “If I had an extra £10,000 spare, I’d put my money in a Birkin or a Kelly, or two Chanel classic flap bags and just leave it there for two to three years”.
Has the Blazy creative magic come just in time for Chanel? Will he be responsible for creating the next generation of blue-chip Chanel bags? Watch this space.
Now read:
Gucci fails to tempt the super rich — again
Gucci’s doomed bid to position itself on the same rarified plane of exclusivity as Chanel and Hermès has had another setback. Its much vaunted, appointment-only Gucci Salon, which opened to much hoopla on Melrose Place, Los Angeles in 2023, was quietly shuttered recently. Designed to cater only to the precious high-net-worth customers who are responsible for some 40 per cent of luxury purchases, it marked a change of strategic direction for Gucci which meant turning its back on aspirational shoppers.
The shutting of the store is yet another sign of the managerial and corporate malaise which has beset Gucci behind the scenes. These problems are most evident to the public in the form of questionable creative director appointments such as Sabato De Sarno, who was sacked after just 2 years during which time his collections caused a 25 per cent drop in sales at Gucci. His replacement, Demna Gvasalia, formerly of Balenciaga, caused the share price of Gucci’s holding company, Kering, to drop 12 per cent, when his appointment was announced earlier this year.
Gucci is fast becoming a case-study in how to ruin a prestigious luxury brand. How much worse can it get?
Now read:
BYD sales overtake Tesla in Europe
Chinese EV manufacturer BYD is now selling more cars than Tesla in Europe after sales leapt 395 per cent, while Tesla’s dropped 49 per cent over the same period. Experts consider this a seminal moment in the EV market, which Tesla has dominated in Europe for a decade. BYD only started operating outside of Norway and Holland in late-2022. Experts blame a PR backlash against founder Elon Musk and an ageing portfolio of cars.
Yachts are an easy way to bring in migrants, says ex-smuggler
A former people smuggler has spoken out a gap in the UK’s border security: private marinas for yachts. These marinas in the UK have “no more security than a caravan site”, one harbourmaster on the Essex coast told the BBC. Another said, “there is nothing to stop this [people smuggling] happening”. This story has echoes of the accusations made by the UK’s former chief inspector of border security, who said that the Border Force failed to adequately screen private aircraft arriving at London City Airport. David Neal was fired by the UK Home Secretary James Cleverly for breaching what he called “the terms of his appointment”.
A fascinating look at how an elderly gang of thieves pulled off a $10 million heist of Kim Kardashian’s jewelry in Paris. (The Times)
Tariffs challenge Europe’s historical dominance in luxury goods manufacturing
For centuries European brands have cultivated the idea that the continent has a special artisanal heritage which means only the very best luxury goods come from Europe. Hence, the immense value of the “Made in Italy” and “Made in France” labels, regardless of the reality of where these products are actually made. President Trump’s tariffs, however, are now shaking the foundations of that model. (WSJ)
Why is Trump so obsessed with other men’s looks?
Another classic and insightful story by Jemima Kelly, who ponders why Trump seems to enjoy showering men with compliments on their appearance, going so far as to call Saudi leader Crown Prince Mohammed bin Salman and the emir of Qatar, “tall, handsome guys”. (Financial Times)
Did you find this newsletter useful or interesting? Please forward it to a friend or colleague, or share your thoughts with us on Bluesky or on Instagram.