Luxury Brands Accused of Low Production Costs, High Retail Prices

Source: IndiaTimes

In a shocking development, two leading luxury brands, Dior and Giorgio Armani, have been accused of paying extremely low prices for manufacturing handbags that are sold for thousands of dollars.

According to a Reuters report, Dior pays its suppliers only $57 for each handbag, which then sells for around $2,800. Similarly, Giorgio Armani pays $99 for bags that retail for over $1,900.

This scandal has led to increased scrutiny of LVMH, Dior’s parent company, which was placed under court administration in Milan last month. LVMH has been accused of outsourcing work to Chinese-owned firms that allegedly treat their workers poorly. Reports suggest that these workers are forced to sleep in factories to work 24-hour shifts.

Giorgio Armani has also faced accusations. The luxury brand is alleged to have failed in properly monitoring its suppliers, raising questions about its business ethics. A judge in Milan has ordered both companies to be under judicial administration for a year to ensure compliance with labor laws and ethical standards in their supply chains.

This situation raises significant questions about the pricing strategies of these luxury brands. While these handbags sell for thousands of dollars, the production costs are remarkably low. This disparity has sparked debates about fairness in the fashion industry and the exploitation of workers at the bottom of the supply chain.

The scandal not only damages the reputations of Dior and Giorgio Armani but also raises concerns within the entire luxury fashion industry. Consumers are becoming increasingly aware and concerned about business ethics and sustainable labor practices. Companies must take steps to ensure they comply with laws and operate with high ethical standards.

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