Why Luxury Should not Delocalize: a critique of a growing tendency

Abstract : Many famous luxury brands have recently planned to delocalize their production. Many applaud luxury brands for closing production sites in their home countries, considering such cost optimization to be a rational evolution. But others claim that in doing so, luxury is losing its soul. This article reminds managers that any decision must be analyzed and evaluated within the context of a strategy. Luxury is a subjective concept but a luxury strategy is not: luxury's ability to sustain its high prices and profitability is governed by strict rules. What Prada and others are doing is, in reality, discontinuing their luxury strategy, in favor of a fashion strategy, without acknowledging this explicitly. In fact, the luxury strategy is a specific business model. Fashion is another, governed by a completely different set of working principles.