The seamy side of the rag trade

Fashion: In l978, an aristocratic 28-year-old Italian with a doctorate in political science reluctantly took over an ailing …

Fashion:In l978, an aristocratic 28-year-old Italian with a doctorate in political science reluctantly took over an ailing luxury business founded in Milan by her grandfather in l913. Ten years later, driven to produce new products by an autocratic husband, Miuccia Prada designed a black parachute nylon backpack, its flap embellished with her grandfather's tiny triangular trunk label, writes Deirdre McQuillan.

The backpack became an instant worldwide hit, made the company a fortune and turned Prada into a household name. More significantly, it became emblematic of the transformation of the luxury business from small family-run operations selling quality artisan products into global brands and multi-billion-dollar corporations.

Thirty-five major brands control 60 per cent of the luxury business today, a business worth $157 billion (€112 billion) producing clothes, leather goods, shoes, jewellery and perfume. Such is the vast global power and penetration of LVMH (Moet Hennessy Louis Vuitton), one of the world's premier luxury companies, that it has made its owner Bernard Arnault the seventh-richest man in the world.

Arnault, who went shopping for Dior, Vuitton and some 50 other upscale brands, made luxury corporate and in so doing "shifted the focus from what the product is to what it represents" according to the author, in a shrewd move that exploited and extended brand image and profitability. The now widely copied strategy works as follows: trump up the company's heritage, hire a hip young designer to make it sexy, streamline the name, splash the logo everywhere, inundate celebrities with free product and advertise the entire package relentlessly. Media coverage of international ready-to-wear shows does the rest ensuring desired brand exposure. Simple.

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In Dana Thomas's fascinating, exhaustive and fast-moving account of the growth and development of the world's big brands, she profiles the ruthless minds and business tactics behind corporate greed and machinations. With a Vuitton bag selling at up to 11 times its cost price, luxury bags today make luxury profits. Figures speak for themselves. The success of the Fendi baguette, a soft oblong pouch, turned a dowdy old fur company into a top-tier luxury brand with 100,000 baguettes sold in the first year. Primary customers are upper income women between 30 and 50 years old, or what's known in Japanese banking circles as "parasite singles" responsible for up to 80 per cent of Japan's consumer spending.

A FASHION WRITER with Newsweek in Paris for the past 12 years, Thomas has criss-crossed the globe to tell a story about how the search for excellence and exclusivity has been exchanged for lower standards, wider accessibility and greater profits. What was once crafted by hand is now mass-produced on factory assembly lines. By going public to fund expansion, luxury companies become beholden to shareholders demanding increases in profits every three months. In an effort to increase volume and lower costs, inferior materials are used and corners cut. "When you get to 1,000 you see the savings" said an Italian assistant describing how cutting sleeves half an inch shorter trimmed costs. Only a handful of brands such as Hermès and Chanel strive to maintain quality.

Her research took her from the ateliers of Hermes and Vuitton in Paris to the Chanel perfume factories in Grasse, the celebrity circus of Hollywood and Las Vegas and the sweatshops in China where production costs 30 to 40 per cent less than in Italy. Along the way, she profiles leading players such as Prada and Arnault, the latter known for his secrecy, fierce competitiveness and venomous "shock and awe" takeover strategies.

STORIES AND ANECDOTES enliven the text, but her description of exhausted Chinese girls in a Mauritius factory sleeping on folded arms on their machines during a work break brings home the harsh reality of the lives of those who produce the goods. In Guangzhou, southern China, she reports how a worker collapsed and died after a 24-hour shift. "'Pure fatigue', the manufacturer told me, 'it's one of thousands of cases here.'"

The seamier, decadent side of the industry is highlighted by the corruption of celebrity stylists and the "swag" bags offered to Oscar stars by luxury brands. The most fascinating chapter, however, is on China where greedy global fingers are already fastening their grip on a booming luxury market. Ernst & Young predicts that by 2010 there will be 250 million Chinese people able to afford luxury goods. The Chinese are starting to buy out upscale brands themselves: Pringle of Scotland, Gieves & Hawkes tailors, Lanvin, Guy Laroche and Asprey now have Chinese owners. Troubled Italian textile mills are next on their shopping lists. In China, where no word for luxury exists, the phrase "ming pai" is used, meaning "famous brands" .

Apart from minor quibbles about numerous spelling mistakes, Deluxe is a bright, lively read that might steady the hands of those about to fork out on overrated and overpriced arm candy, dubious status symbols of a modern age. Style icon and celebrated couture collector Daphne Guinness recently said: "Once something is a must-have, I want to put it in the bin. I don't want anybody telling me I need to have anything." Not the kind of attitude that would endear her to the corporate bosses of ming pai.

Deirdre McQuillan is Fashion Editor of The Irish Times and a freelance feature writer

Deluxe: How Luxury Lost Its Lustre By Dana Thomas Allen Lane, 376pp. £20