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