Top fashion brands streamline operations to boost production

FLORENCE, Italy • You cannot expect Chinese shoppers to wait patiently to get their hands on the latest and hottest luxury goods.

This is why fashion powerhouse Gucci is bringing more manufacturing in-house, as luxury firms step up efforts to meet rampant demand from Chinese consumers with slicker operations.

Gucci has also outlined plans to almost halve its reliance on independent leather goods suppliers.

The steps come as labels, including Britain's Burberry and France's Louis Vuitton, begin to levy greater control over their production or invest in speeding up internal processes, to ride a rebound in luxury goods sales.

Gucci, one of the fastest-growing fashion brands last year following a flamboyant design makeover, plans to cut its use of independent suppliers to 40 per cent of its leather goods production over the long term, from 75 per cent now.

The Italian brand aims to halve the turnaround time between a product's conception and delivery in store as a result, chief executive Marco Bizzarri said, as well as secure the production capacity it needs to match its punchy sales ambitions.

"We want to reduce the lead time, and it's not possible if you're too scattered with small suppliers," Mr Bizzarri told reporters at Gucci's new ArtLab site outside Florence, where it will make prototypes of bag and shoe designs.

"We also need to make sure other brands are not stealing supply. Because of the growth that we're having, we need to protect our artisans," Mr Bizzarri added.

Italian brands have traditionally worked with an external network of dozens of local artisans on items such as handbags, when French peers Hermes and Louis Vuitton almost exclusively use their own workshops.

Gucci has bought out 10 local suppliers and said it was closing in on another 10, though the shift to what the brand considers internal production will for the most part involve creating joint ventures with external workshops or giving them exclusive contracts.

Even that can help to stabilise production, however, when some manufacturers in Italy are vulnerable.

Some are "tiny, almost family-like workshops which have know-how but where there are often questions over whether they are sustainable, or regarding succession," said Mr Olivier Salomon, managing director at consultancy Alix Partners in Paris.

Other brands with a big focus on leather goods like Milan-based Prada are grappling with these issues, too, as they also consider taking more production in-house, partly to help nurture new generations of skilled workers.

"One of the problems with outsourcing is quality. You need artisans... and the problem with craftsmanship is one of training; you can't find these kind of people everywhere," Prada chairman Carlo Mazzi said.

The label has inaugurated a new industrial site in eastern Tuscany.

While traditional skills are in demand, fashion brands are also seeking to build up internal expertise at a time of radical innovations in the materials used in fashion. Mr Bizzarri cited leather grown in laboratories as one potential industry game-changer, albeit a far-off one.

Part of Gucci's ArtLab remit is research and development, as the brand seeks to perfect production methods new and old.

"If you internalise production, you are able to experiment much more," Mr Bizzarri said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 16, 2018, with the headline 'Top fashion brands streamline operations to boost production'. Print Edition | Subscribe