Latest news with #luxuryindustry
Wall Street Journal
16 hours ago
- Business
- Wall Street Journal
Trade Deal Brings Relief to Europe's Luxury Industry
PARIS—Europe's luxury industry is breathing a sigh of relief after escaping months of trade uncertainty that has sapped the appetite of even the wealthiest consumers to splurge on handbags and champagne. President Trump on Sunday announced a deal with the European Union that will see most goods from the bloc subject to a 15% tariff. The agreement addresses a significant concern among luxury executives: that a prolonged trade dispute would have further dampened demand from consumers already hesitant to spend on high-end goods.
Reuters
17-07-2025
- Business
- Reuters
Swatch half-year sales miss estimates, dragged by low demand in China
July 17 (Reuters) - Swatch's (UHR.S), opens new tab sales fell in the first half of 2025 as the Swiss watchmaker faces cooling demand in the luxury industry and continued weakness in China, it said on Thursday. The maker of Omega, Longines and Tissot brands, along with its plastic Swatch watches, said its half-year sales fell 7.1% at constant exchange rates to 3.06 billion Swiss francs ($3.82 billion), compared to a year earlier. That missed the 3.2 billion francs expected by analysts polled by LSEG. ($1 = 0.8020 Swiss francs)
Forbes
16-07-2025
- Business
- Forbes
Loro Piana Joins Growing List Of Luxury Brands Tied To Worker Abuse
New York, 4/27/2023: Loro Piana high end clothing store in Meatpacking District of Manhattan. An Italian court has placed the renowned luxury cashmere brand Loro Piana under judicial administration for a year after an investigation uncovered worker abuse and exploitation in its supply chain. The Court of Milan found that the company 'culpably failed' to oversee its suppliers in order to pursue higher profits and cited a wider, systemic pattern of employing subcontractors that violate fair labor practices. Loro Piana is the fifth luxury brand – and the second LVMH-owned brand after Dior – to be found in violation of Italian labor laws since the country began cracking down on subcontracting practices commonly used throughout the industry. Other brands that the court determined have allowed illegal and unethical labor conditions to persist throughout their supply chain include Giorgio Armani, Valentino and handbag company Alviero Martini. This is not just a stain on the reputations of the brands involved but a threat to the entire luxury industry. Bain estimates that about 50% of global luxury goods production is carried out by thousands of small manufacturers in Italy. 'Allegations of worker abuse can have a profoundly negative impact on the reputation of a high-end fashion brand,' said Stephen Hahn, chief reputation and strategy officer at RepTrak, a corporate reputation management firm. 'Perceptions of workplace is one of the seven key drivers of reputation within the consumer discretionary industry and is especially important to luxury goods,' he continued. Allegations Of Mistreatment The investigation carried out by the Carabinieri police labor protection unit began in May after a worker reported being physically assaulted by his employer, a workshop – more accurately described as a 'sweatshop' – that produced Loro Piana men's jackets. The company has since been shut down. Investigators found workers were forced to work up to 90 hours a week, seven days a week and made less than $5 per hour. They also slept in the factory in illegally built rooms. Further investigation found ten workers were employed illegally, seven of whom were undocumented immigrants from China. Complicating the investigation was the fact that Loro Piana didn't contract directly with the offending company but went through two front companies that had no actual manufacturing capability. The front companies subcontracted to several different firms, all of which were rounded up in the investigation. Loro Piana, not parent company LVMH, issued a statement to Fox Business, clarifying that it had not been made aware of the subcontractor relationships. The company emphasized that under both legal and contractual obligations, the company should have been informed of the arrangements. 'Loro Piana firmly condemns any illegal practices and reaffirms its unwavering commitment to upholding human rights and compliance with all applicable regulations throughout its supply chain,' the company stated. 'Loro Piana is committed to ensuring that all its suppliers comply with the Maison's highest quality and ethical standards in line with its Code of Conduct. In this perspective, Loro Piana has been constantly reviewing and will continue to strengthen its control and audit activities.' However, it appears alleged unethical dealings have been going on for some time, even after many of Italy's fashion brands signed an accord to fight worker exploitation in May. The owner of the subcontractor said the company has been producing between 6,000 and 7,000 men's jackets per year at prices between €118 and €128 ($137 to $149) depending upon the number ordered. Loro Piana cashmere jackets sell for more than $4,000, though the company stated: 'The reported cost figures are not representative of the amounts paid by Loro Piana to its supplier nor do they consider the full value of all the elements, including, among others, raw materials and fabrics.' Tangled Web Milan-based visiting international marketing professor at Università Cattolica, Alessandro Balossini Volpe, explained that the luxury fashion supply chain is an increasingly complex network involving multiple manufacturers, raw materials suppliers and numerous contractors and subcontractors, making it increasingly difficult to keep track of. Added to that, the fashion industry is highly volatile with a growing demand for speed in deliveries, constantly revolving collections and diversification of product offerings. 'The luxury fashion manufacturing supply chain in Italy is notoriously fragmented,' he explained, with a majority of suppliers being family-run businesses with ten or fewer employees. 'Over the last several years, they have been under constant pressure on prices and shrinking volumes, which has put many small players out of business. As a consequence, if a brand has an increasing turnover of suppliers, control over them gets increasingly difficult,' he said, adding 'We have a situation of unprecedented complexity in the management of the supply chain.' Tip Of The Iceberg? Balossini Volpe believes that a majority of luxury businesses and brands follow responsible business practices and have been rigorously trying to manage their supply chains. However, 'I am also convinced that more than a few players, including some big names, have been chasing profits at all costs, sometimes turning their eyes away from disreputable situations that they could have fixed or changed.' He suggested that the five luxury brands implicated in unethical supply chain practices are not isolated occurrences, but rather the tip of the iceberg in a deeper, systematic failure within the fashion industry. 'All of the luxury fashion brands could fall under suspicion of collectively engaging in unethical and unsustainable business practices,' he warned. 'It would mean questioning not only the tangible, intrinsic value of the products, but also their intangible value that includes their credibility and integrity,' he concluded. See also:
Forbes
10-07-2025
- Business
- Forbes
How To Overcome A Scarcity Mindset And Thrive In The Luxury Industry
The scarcity mindset limits professional development, especially in the luxury world In a world defined by rarity and aspiration, the luxury industry should be the last place where scarcity reigns. Yet, a silent saboteur runs through the careers of many professionals in this space: the scarcity mindset. Coined by Stephen Covey in his 1989 bestseller The 7 Habits of Highly Effective People, the term refers to a worldview that sees success as a finite pie — if someone else gets a slice, there's less for you. The opposite view is an abundance mindset, Covey wrote. In luxury, where access is a tightly guarded commodity, this belief can distort everything from how professionals price their services to how they perceive their worth. 'It's like wearing blinders,' says Karina Vazhitova, a luxury career advisor. 'I've seen incredibly talented professionals shrink themselves because they think there's not enough; not enough jobs, visibility, or support.' And it's not just about opportunities. Scarcity thinking seeps into everyday business practices. Helena Blanchet, a high jewelry and luxury expert, client experience trainer and coach, sees it regularly on the shop floor: 'Some advisors assume, 'They won't buy this; it's too expensive,' because they're projecting their own budget onto the client. They've forgotten how to step into someone else's world.' Karina Vazhitova is a luxury career advisor Where Scarcity Mindset Begins This way of thinking is often inherited long before anyone steps foot in a luxury boutique. 'Our money mindset is wired into us early,' explains Debbie Sassen, a business and money coach for six-figure women entrepreneurs. 'If your parents said, 'We can't afford that,' or made negative comments about wealthy people, those messages become internal truths,' she notes. Sassen adds that pop culture doesn't help: 'We see wealthy characters portrayed as greedy or shallow, not as philanthropists building hospitals or funding education. Subconsciously, we learn that being rich is wrong, or at least suspect.' That conditioning sticks. And in the luxury industry, which is, by nature, small, hyper-networked, and often opaque, it can harden into a dangerous belief: that there's only one right path, and deviation equals failure. 'Many of my clients feel that if they didn't go to the right school, land the right internship, or work at a marquee brand by 30, they've missed the boat,' says Vazhitova. 'But that's just not true.' Helena Blanchet is a high jewelry and luxury expert, client experience trainer and coach Inside The Scarcity Mindset At Work The scarcity mindset doesn't just manifest in how people perceive themselves; it also influences how they present themselves to others. Blanchet points to the moment when a client hesitates over price. 'If the salesperson is focused on the tag, they make it transactional. But if they focus on craftsmanship, storytelling, and curiosity about the client, the energy shifts completely. Now we're talking about a piece of art, not just a price,' she says. Sassen agrees. 'When professionals say, 'Nobody will pay me that,' they're not just doubting the market, they're doubting themselves. They've internalized the idea that success is possible, but not for them.' That thinking creates a comparison trap, especially in image-conscious industries. 'I had a client who worked in luxury beauty,' recalls Vazhitova. 'She had decades of experience, but constantly compared herself to creatives. She felt she'd never be seen as visionary.' By shifting her focus to her actual strengths, including consistency, empathy, and customer insight, she gradually became a trusted strategic voice in her company. A year later, she was promoted to a global role. Vazhitova explains that the key to this individual's success was to let go of who she thought she had to be and own who she already was. From Scarcity To Strategy How can luxury professionals begin to unlearn scarcity and replace it with something more expansive? 'Awareness is step one,' says Sassen. 'Catch yourself in the thought: 'That's not for me.' Then challenge it. Ask, 'What if it is for me?'' She also recommends a bold but simple practice: spend time with people who have more. 'Befriend people earning more than you. You'll see they're normal, honest, and kind. That proximity shifts your belief about what's possible.' Blanchet suggests bypassing price altogether in the sales conversation. 'Focus on the piece: the design, the story, the emotion. That's what draws clients in.' She often trains advisors to surprise clients with one exceptional item, regardless of budget. 'Say, 'You're a connoisseur, let's see what you think.' It invites a dialogue about beauty, not money.' Curiosity is another antidote to scarcity. 'Know your clients,' Blanchet adds. 'What do they love? How do they live? Build trust around their world, not just the items.' Debbie Sassen is a business and money coach for six-figure women entrepreneurs Steps Toward Abundance Scarcity thinking can be stubborn, but daily rituals help loosen its grip. Sassen advises her clients to build a simple affirmation habit: 'Every day, remind yourself: 'It's possible someone will say yes. It's possible I belong here.'' Vazhitova encourages her clients to lead with generosity. 'The most magnetic professionals I know aren't the ones who chase the spotlight. They're the ones who make others feel seen. That quiet confidence is what opens doors.' Blanchet agrees. 'The luxury client responds to emotional intelligence. If you believe in what you're offering and see the person in front of you, the sale becomes a relationship, not a transaction.'
Forbes
23-05-2025
- Business
- Forbes
Trump's 50% EU Tariffs Further Threaten Luxury And Alcohol Brands
President Trump is threatening to impose 50% tariffs on the European Union effective June 1st, after complaining that trade talks are stalling. The announcement caused another drop in European stock prices, with french index CAC40 down 3%, also hitting LVMH's shares directly, down 8% since the announcement. This news isn't helping the luxury industry, as it is being hit from all angles. Its biggest players are European, and their key market is none other than the U.S. According to a report by McKinsey, the U.S. luxury market is expected to grow more than any other regions, at a 4-6% growth rate, representing a strategic area for luxury brands. In 2024, the U.S. was LVMH's third biggest market, responsible for 25% of the group's total revenue, and a key geography for growth. Tariffs would inevitably hurt the group's activity in the U.S. as it will likely have no choice but to raise prices. Louis Vuitton, one of its main brands, has already raised the price of one of its bags by nearly 5% a few weeks ago. Hermès has also announced it will raise its prices to offset tariffs, a move that will most likely be taken by most European luxury players selling in the U.S. These price increases will directly impact consumer spending, with American customers thinking twice before purchasing leather goods from European brands. But there's not much these brands can do given their need to protect margins. And with these brands' production facilities mostly located in France and Europe, there aren't many other solutions. This market dynamic comes at an unfortunate time for LVMH and other groups, many of which are already witnessing a decline in revenue from the U.S. market: LVMH posted a -3% revenue decline for the first quarter of 2025. The U.S. and the European Union are facing an alcohol tariff-war since the start of the year, with Europe threatening to tax American Bourbon (before deciding against it later on), while Trump previously threatened to impose a 200% tariff on European spirits and wine coming to the U.S. While this 50% current figure is much lower, it still represents a serious blow to the industry, which is already facing a variety of unfavorable market dynamics. The European alcohol represents 17% of total alcohol consumed in the U.S., making the region a strategic market for European alcohol players. 32% of European alcohol is sold and sent to the U.S., a figure that will most likely drop if these tariffs are implemented. This will directly harm producers of wine, champagne and spirits, who are already facing challenges. The global wine consumption fell to the lowest it has ever been in 60 years, with a 3% decline in 2024. Inflation, market uncertainty and a shifting consumer behavior towards mindful drinking are directly affecting demand for wine, which is being felt by wine producers but not only. LVMH reported a decline in sales volume for champagne and cognac for 2024, with overall wines and spirits revenues down 9% for Q1 2025. 'The key shift in the last few years has been a downturn in the major growth markets, particularly USA and China, on top of stable or declining consumption in the traditional wine countries," shared International Organisation of Vine and Wine (OIV) director John Barker with This news is certainly not going to help, bringing additional stress to wine and overall spirits makers. With the U.S. representing such a large market for European luxury and drinks players, all eyes are on how they will react, most notably LVMH. The luxury conglomerate is heavily reliant on American consumers and is already facing declines in revenues, putting added pressure on its need to reassure investors. LVMH owner and CEO Bernard Arnault might use his ties with President Trump to strike a deal, frustrated at EU's way of engaging in negotiations. According to the FT, the CEO told a French parliamentary on Wednesday, May 21st: 'The United States is the world's largest market, and it is very important to reach an agreement with the US for Europe. So far, things seem to me to be off to a relatively bad start'. No need to imagine what he must be thinking now.
