Profit-driven multinationals pump millions into the cult of cheap luxury

Published Aug 28, 2007


There was a time when luxury goods were made by hand. Tailors and artisans dealt directly with clients, and shopping was an elevated experience.

The $157 billion (R1 trillion) luxury goods industry isn't what it used to be, and that's a pity, Dana Thomas declares in her lively and incisive Deluxe: How Luxury Lost Its Luster.

These days, writes Thomas, Newsweek's Paris-based culture and fashion reporter, the industry is dominated by a handful of publicly traded corporations. These multinationals spend millions pushing a "cult of luxury" on an obliging "middle market".

Fine gowns, jewellery, clothing and cosmetics have become homogenised and omnipresent, she grumbles, their quality downgraded for consumers more interested in flaunting logos than in owning exquisitely made items.

"Luxury for everyone" is how Burberry Group markets the idea. Coach calls it "affordable luxury".

"Consumers don't buy luxury-branded items for what they are, but for what they represent," Thomas writes.

The race to purchase the latest creations from Prada, Gucci and Christian Dior is so competitive that shoppers of all incomes knowingly buy counterfeit goods.

Thomas reports that since LVMH Moet Hennessy Louis Vuitton (LVMH), Gucci Group, Coach and similar companies have gone public or become part of larger corporations, they've sought to increase revenue and profits by offering products at prices just low enough to give everyone a taste of the high life.

The upshot, she complains, is that cheaper materials are going into handbags, synthetics are infusing perfumes, and silk is nothing like the fabric Italy once produced. "Luxury companies made their brands, rather than the actual products, the objects of public desire."

This debasement of the industry does make for good stories, though. Take the young Japanese women who in the 1990s became known as Parasite Singles. They were so eager to buy, Thomas reports, that they took to the skies, flying to Hawaii, Beverly Hills and Europe, and giving birth to a duty-free luxury goods market worth $9.1 billion.

Miles away (and Thomas does travel) are Hollywood's celebrity stylists. These fashionistas extort a ransom of money, jewellery, vacations and home make-overs from the luxury companies in return for prodding their movie-star clients to wear particular brands within range of the paparazzi.

Then there is Bernard Arnault, the powerful LVMH chairman who led the way towards the harvest of the middle market with celebrity ads and low-wage production.

Arnault is both loathed and admired for shaking up his company, hiring and firing top designers, loading up on marketing campaigns and demanding big profits from his many brands.

To meet the middle market's lower price points, many luxury companies have moved production to lower-wage countries.

China figures heavily. Its sweatshops provide the cheap labour that makes possible more than $100 billion a year in luxury goods sales. The country is also home to product counterfeiters and the gangs that provide the muscle to export them.

Meanwhile, as the Chinese economy has grown, a wealthy class has emerged there to snap up luxury goods. Not only are Beijing and Shanghai now home to plush Louis Vuitton shops, so are Hangzhou, Guangzhou and Chengdu.

Some companies, Thomas charges, falsely claim their products are made in French and Italian workshops long since shrunk or closed, then use the costliness of western European labour as an excuse to hike their prices.

"The focus is no longer on the art of luxury," she laments. "It's on the bottom line."

- Leon Lazaroff is a reporter for Bloomberg News. The opinions expressed are his own

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