PARIS, France — As demand for luxury products shows no signs of abating — despite forecasts that the global fashion industry growth will slow — some of the French fashion industry’s biggest names are reinforcing their commitment to local production.
Chanel is currently completing a 25,500 square metre building complex on the outskirts of Paris that will house 11 of the 12 speciality ateliers held by its Paraffection subsidiary (these include feather workers Lemarié, shoemakers Massaro, embroiderers Maison Lesage and milliners Maison Michel). Two new Louis Vuitton factories are slated to open in France next year, while family-run Hermès will open four new leather goods sites across the country by 2022.
French ateliers have built a global reputation for their exacting standards, turning “Made in France” into a valuable strategic proposition. But that depends upon “the capacity of the industry to maintain its know-how,” according to Laurent Raoul, associate lecturer at Institute Français de Mode.
BoF examines four key drivers behind the luxury industry’s investments in “Made in France,” said to total hundreds of millions of euros according to analyst estimates.
The Marketing Factor
When shoppers buy French luxury brands, they are purchasing a piece of culture, not just a leather handbag. Indeed, “if you spend $10,000 for an Hermès Birkin handbag, you expect that it’s Made in France,” according to luxury analyst Mario Ortelli.
With French megabrands already using the country’s luxury heritage as a key element of their marketing playbooks, “manufacturing in France makes sense for the sake of consistency,” Bernstein analyst Luca Solca said.
Some 16.5 million international consumers — including 842,000 from China — visit Paris each year to buy luxury handbags, according to 2018 data from the city’s Visitors Bureau, even though the same purchase could be made at home. A more attractive price isn’t the only driving factor; the experience of buying French products in France still retains global appeal.
“Clients mostly from Europe and Asia are asking for 'Made in France',” said Louis Vuitton Chief Executive Michael Burke, with the concept resonating particularly with Chinese consumers who represent around a third of global luxury sales, according to a Bain study.
But this is dependent on product category; whereas “Made in France” resonates with leather goods and ready-to-wear customers, “Made In Italy” holds gravitas in leather, tailoring, silk and footwear.
In the eyes of luxury consumers, “France is the leader of flou [more fluid designs, evening wear and drape] while tailoring remains an Italian and British specialty,” Raoul said, adding that while footwear production has dramatically disappeared in France, the Italian region of Veneto “has become the indisputable leader.”
“Made in France” also affords an opportunity for brands to market themselves in more sustainable terms. Louis Vuitton’s Burke believes a more localised approach to manufacturing is both good for the brand’s bottom line, and “good for the environment.” Proximity to market offers an opportunity for luxury labels to align with customers’ growing interest in sustainability through promoting local production, according to Pascal Morand, executive president of the Fédération de la haute couture et de la Mode.
Quality, Quality, Quality
The strategy is also helping to future-proof artisanal expertise for the next generation, particularly as the luxury industry faces challenges to recruit and train artisans to be able to produce items that meet the required standards (a process that can take upwards of 18 months for certain products).
Luxury brands are struggling to replace highly-skilled clothing, leather and jewellery workers who are reaching retirement age, particularly after decades of deindustrialisation in France, which has diminished the pool of available specialists.
“Extreme quality, made-to-measure, all these values that are the true values of luxury, might have been left aside at a certain period,” Burke said at the September inauguration of LVMH’s 16th leather goods workshop in western France.
But quality comes at a price, especially in a country where labour costs are high and competition to recruit the best suppliers and artisans is fierce. Training a luxury artisan can cost up to €32,000 ($35,000), according to Laurent Vandenbor, general manager of the Mode Grand Ouest, an association of French clothing manufacturers.
“There is a real know-how in France that we don’t find elsewhere in the world, both on the creation and manufacturing fronts,” said Chanel President of Fashion Bruno Pavlovsky at October’s ceremony for the new métiers d’art site.
The Need For Speed
Consolidating production in France has helped luxury brands guarantee provenance, secure supply chains and enables greater speed-to-market, making it harder for international brands to compete.
Eighty percent of Hermès’ products are made in France, with 70 percent manufactured at the brand’s own production sites, according to Guillaume de Seynes, executive vice president of Hermès’ manufacturing division. Local production “also allows greater reactivity when it comes to launching collections,” he added.
For Louis Vuitton, "luxury is not having [a product] in stock immediately, it’s getting in stock quickly," said Burke, who sees the market heading to a more localised, made-to-order model that will require greater agility and speed. Louis Vuitton’s latest atelier to open in France — dedicated to exotic skins — is set to be located in Vendôme, less than an hour from Paris by train. Some Louis Vuitton bags take as little as two weeks to go from production to delivery to stores.
The luxury industry has provided the French government with a rare bright spot after years of high unemployment and economic strife. According to a joint study between Institut Français de la Mode and French market research firm Quadrat Études, the fashion industry generated 617,000 direct jobs in 2016. And with an estimated turnover of €154 billion ($170 billion), the industry is said to account for 3.1 percent of France’s gross domestic product, more than aeronautics and car manufacturing.
In January 2019, a strategic committee of representative bodies from across the fashion industry inked an agreement with the French government to support training and education measures to strengthen the country’s network of industrial suppliers, back emerging brands and launch sustainability projects.
And in November, the committee kicked off a recruitment campaign called “Savoir Pour Faire,” in a bid to attract some of the 10,000 additional workers per year needed by the luxury industry. Hermès is searching for an additional 400 skilled workers alone, working closely with the French employment agency Pôle Emploi to create jobs at their regional manufacturing sites. “New hires come from all horizons. They were policemen, cooks,” de Seynes said.
LVMH is France’s third largest recruiter, investing €1 billion in training in 2018, Chairman and Chief Executive Bernard Arnault stated earlier this year. “We also have a civic responsibility to produce in France,” said Burke. “If we let the craftsmanship leave, even to places as close as Italy, I think it’s inevitable that the minds, the creativity in the sector will follow.”
In September, the conglomerate announced plans to add roughly 1,500 manufacturing jobs in France over the next three years. And while there is no direct tax incentive for brands to operate locally, the authorities can provide assistance. LVMH for example, received the building permit for their Beaulieu-sur-Layon workshop in less than six months. “Historically it could take as long as two years to remove the obstacles,” Burke said.
Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder’s documentation guaranteeing BoF’s complete editorial independence.