Dior Bags That Cost $57 To Make Are Sold For $2800 (Is Luxury The New Fast Fashion?)

Two Italian luxury giants pay just a small amount to produce handbags that retail for thousands of dollars, according to documents in a sweeping investigation of subcontractors.

Italian prosecutors in Milan investigated the LVMH subsidiary Dior's use of third-party suppliers in recent months. Prosecutors said these companies exploited workers to pump out bags for a small fraction of their store price.

Citing documents examined by authorities, Reuters reported last month that Dior paid a supplier $57 to produce bags that retailed for about $2,780. The costs do not include raw materials such as leather.

The relevant unit of Dior didn't adopt "appropriate measures to check the actual working conditions or the technical capabilities of the contracting companies," a prosecution document said, according to Reuters.

In probes through March and April, investigators found evidence that workers were sleeping in the facility so bags could be produced around the clock, Reuters reported. They also tracked electricity-consumption data, which showed work was being carried out during nights and holidays, the report said.

The subcontractors were Chinese-owned firms, prosecutors said. They said most of the workers were from China, with two living in the country illegally and another seven working without required documentation.

The probe also said safety devices on gluing and brushing machines were removed so workers could operate them faster.

LVMH didn't immediately respond to a request for comment from Business Insider sent outside regular business hours. Court documents showed that Dior submitted a memo highlighting its supply-chain improvements, The Wall Street Journal reported Tuesday.

The probe also extended to Giorgio Armani contractors, and the luxury company was accused of not properly overseeing its suppliers.

Armani paid contractors $99 per bag for products that sold for more than $1,900 in stores, according to documents seen by Reuters.

A spokesperson for Armani Group told BI in a statement after publication that it is collaborating with the authorities.

"The company has always had control and prevention measures in place to minimize the risk of abuses in the supply chain," the statement said.

Judges in Milan have ordered units of both companies to be placed under judicial administration for one year. Reuters reported earlier this year that they'd be allowed to operate during the period.

A regular manufacturing practice
The prosecution said violating labor rules was a common industry practice that luxury giants relied on for higher profits.

"It's not something sporadic that concerns single production lots, but a generalized and consolidated manufacturing method," court documents about the decision to place Dior under administration said, according to Reuters.

"The main problem is obviously people being mistreated: applying labor laws, so health and safety, hours, pay," Fabio Roia, the president of the Milan Court, told Reuters earlier this year. "But there is also another huge problem: the unfair competition that pushes law-abiding firms off the market."

Last year, LVMH had 2,062 suppliers and subcontractors and undertook 1,725 audits, according to its environmental- and social-responsibility report.

LVMH CEO Bernard Arnault is the world's third richest person, according to the Bloomberg Billionaires Index. His daughter, Delphine Arnault, is the CEO of Dior.


#luxuryfashion #dior #fashion

[mind-of-neo]

That's called evil. That's called greed. I won't support it

[miaomiaou_]

There is a reason why Bernard will Bernard Arnault is the richest in the world. He's been watering down craftsmanship in favor of high margins since the 90’s 😭

[katympress]

Each year from 2018 - 2021, I would treat myself to something from Emilio Pucci. The print execution was perfect. Since the Pucci family sold their remaining shares to LVMH, I have noticed a decline in print quality. Most of what I now see online has obvious out of register printing flaws, yet the prices remain the same. It’s sad to see what LVMH is doing to these fashion houses.

[RajAujla-hc]

Back in the 90’s all the foreign students from China would tell us all about the cheap clothes available to them, like t shirts for a £1. They were talking about high end clothing that we paid a minimum of £40 for (in the 1990’s). I would not be surprised if the Dior bag cost £1 to make and the rest of the cost was expenses for everything else. It explains why so many high end brands give so much stuff away to Hollywood/social media celebrities, otherwise they would be bankrupt by now, wouldn’t they?
Special machines!!!🤣🤣🤣

[KD-dcfd]

I feel you on sewing my own clothes. I am a knitter so when winter tiles around if I see a piece in store that can be hand knit, I take a picture of the item then replicate it at home with the materials I have collected over the years. It takes longer yet the yarn is still less expensive than buying retail and I enjoy the meditation of creating my own garments. Great topic!

[fabandgoodvibes]

I'm a 55 y.o. fashion enthusiast, and I plan on creating my own unique line based on inspiration from the 1970s era, but I'm taking one year at a time.

[FashionRoadman]

Huge thanks to Tarik for donating during the stream!

[ambds]

It baffles me how companies can just charge more money for cheaper, worse goods, depending on the name to keep product moving, and people... just believe they aren't doing that? Why would anyone believe them?

[davidpachecogarcia]

Designer>Luxury.
The label of “luxury” in fashion is also becoming an oxymoron. More than ever it’s evident that you’re paying for the label and flaunt that you can spend more money than the average person. I also believe in going to a brand for unique items that you can’t get anywhere else.

[lunallena]

The joke is in those luxury consumers.

[Bebe-dehk]

Sewing is a great hobby. I make patterns and sew a lot of my own clothes. It’s fun / challenging to come up with something and try to figure out how to make the pattern and then in what steps to sew it. and what fabric works best to. Achieve the look you want. Sometimes I’ll also just see something like a Versace blazer that I absolutely can’t afford and I’ll just make it myself. I’m always obsessed with how clothes look on the inside. Sewing makes you notice all the little details

[Flaubert]

Thank you for making this! The industry is literally the Emperor's new clothes. I am buying vintage bags from the 80s and 90s and not new ones. The product value is much better

[evaphillips]

As a dressmaker, fashion lover, I ONLY support local, ethnic designers and estate sales. It’s just as expensive imho but to shop ethically for quality pieces is worth it.

[mrandmrscorona]

My Ted Baker stuff is better made structurally that my Gucci and Louis stuff.

[Seb-uqwq]

How does this even surprise anyone? It’s a fabric bag? It’s like buying polyester pants for 1000€ expecting magic, just because it’s a given brand producing it - if it really cost 100€ including fabrics to make, the production costs are actually quite high relative to say fast fashion brands. From my time in the fashion industry such bags was always used to subsidize the clothing - because we all know that these brands hardly make money on clothing, but mainly on bags and accessories. I don’t know how it is now, but when I was in the industry, a LV leather bag would cost about 250€-300€ to make, and would cost about 2k€ to sell, and retail for about 3, 4-3, 6k€. Production costs has always been a very little part of total costs. Apart from that, there are still good factories in Italy, and especially in Portugal, and still good stuff to be had from luxury brands. But bags, accessories, etc. are not it.

[traceyreneerivera-fernande]

My daughter works in retail luxury corporate she saint laurent has never been really high end luxury because pre pandemic they were always on sale at retailers. They got greedy and almost doubled prices that camera bag I got for 800 during pandemic why is it 1690 now 😮

[moomin]

How luxury lost its luster>>>
I even went to Piccadilly Waterstones and bought the last book, when I traveled to London early this year 😩

[sophiaaldous]

So many creative fields get butt hurt over criticism these days, as if they are above people having opinions about their work. Are people rude sometimes? Yes. Do some people make uninformed opinions? Absolutely. But your creative output is not above criticism, and to put people down for it is to imply that one is above any scrutiny whatsoever.

(I love your channel, keep doing your thing).

[Coastpsych_fi]

Thanks for making a video and this is a stark reminder of the greed in the world.

[mochimochi]

I read that book back in 2007 need to reorder!