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Is the luxury sector in danger of a supply chain monopoly?

Luxury fashion brands are seeking greater control over their supply chain and snapping up tanneries and the like to do so. But is it the right thing for the industry?

Last year saw luxury group LVMH snap up an 80% stake in luxury Italian cashmere business Loro Piana, while Chanel purchased Scottish knitwear manufacturer Barrie Knitwear. Meanwhile Hermes added to its stable of tanneries this year by d’Annonay tannery, which had already been a key calf leather supplier to the luxury French brand.

So is it the right thing for the industry already dominated by the large brands and groups such as LVMH and Kering? Well, the answer is yes to an extent.

This week I interviewed Xavier de Royere, the chief executive of luxury French men’s footwear brand Maison Corthay and previously the head of Louis Vuitton’s UK operation. He agrees there has been a trend towards luxury brands seeking greater control of their supply chains, but for smaller businesses like his, this poses a problem.

The larger luxury groups already have a much mightier buying power, being able to place larger orders, but this latest development, if left unchecked, could end up squeezing smaller players out. This is obviously an issue, and one to watch.

De Royere does concede however, that the upside to this is that by aquiring these businesses, the larger luxury businesses are ensuring that those skills survive through guaranteed and sustained business, almost acting as safe-keepers in this respect.

So there is a benefit to this trend, so long as it remains in check and allows the smaller brands to offer the differentiation the market needs.

For more on this issue, and the luxury market in general, Drapers will be producing its second Luxury Market Report in assocation with Hammerson and iProspect, on November 16.



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