The demonstration was a rare one for the vaunted French house, whose parent company, LVMH Moët Hennessy Louis Vuitton, is the world’s largest luxury conglomerate by revenue. The last time a similar demonstration happened was in 2017, and before that, in 2002. In all cases, workers had expressed dissatisfaction with their share of Louis Vuitton’s often stratospheric profits, which typically run into billions of euros every year.
Last week’s two-hour-long work stoppage, which was first reported in Le Monde, involved 240 craftspeople from three out of Louis Vuitton’s 18 ateliers in the French towns of Asnières, Issoudun and Sarras. Union representatives from the French Democratic Confederation of Labour (CFDT) and the General Confederation of Labour (CGT) said the workers were unhappy with Louis Vuitton’s proposal to increase wages by an average of 150 euros ($170.80) per month and reduce workloads from 35 to 33 hours per week. They further claim that Louis Vuitton wants to use to proposed working hour change to eliminate the standard day shift in favor of only morning and evening shifts.
“The proposal to compute working hours on an annualized basis isn’t convenient for us; it will simply go to the detriment of our private life,” Mireille Bordet, a CFDT representative in Asnières, told AFP. “Switching from 35 to 33 hours won’t generate additional working time reductions and will force us to work late in the evenings.”
The unions are also demanding higher pay. A Louis Vuitton employee with 15 years of experience, they say, only makes 14 euros ($16) an hour, a figure that stands in contrast with the thousands of euros an LV-monogrammed bag can cost. The minimum wage in France is 10.57 euros, or $12.03.
“The management is tying salary rises to the working hours [change],” Bordet said. “They said that if the project is approved, [wages] will rise, but if not, they will give us nothing.”
Louis Vuitton, which employs nearly 4,8000 artisans across France, said its goal was to create a healthier work-life balance for its workers, and that it maintains an “ongoing, professional employee-relations dialogue” with all of its social partners.
“Louis Vuitton reiterates that the wellbeing and fulfillment of its employees [are] at the heart of its social policy, and has an advantageous compensation policy that allows its atelier employees to be paid an average of 18 months’ salary per year,” a spokesperson said in a statement. “Louis Vuitton intends to calmly continue this dialogue in order to reach an agreement.”
Wage strikes by garment workers are a more common occurrence in the global South, where poverty wages and excessive overtime are endemic—and almost expected. Despite an association with Old World artistry and sophistication—something that many marketing campaigns cannily wield—their counterparts in the West are not immune to exploitation, said Meg Lewis, campaigns director of Labour Behind the Label, a workers-rights nonprofit based in the United Kingdom.
“Many people assume a ‘Made in Europe’ label means that workers who make clothing enjoy good working conditions and are paid fairly,” Lewis told Sourcing Journal. “Sadly, this is not the case for many workers. This seems to be another case of a brand trying to force through changes to hours and conditions, to benefit the company, not the workers. Instead of trying to push workers into accepting these changes, Louis Vuitton should meaningfully engage with workers and unions on their concerns.”
News of protesting workers could also cast a pall on the brand itself, said Pamela Danziger, a market researcher who studies the habits of affluent consumers. If Louis Vuitton doesn’t make concessions, it might even alienate customers who aren’t “necessarily part of the entrenched elite.”
“I think what we are seeing at LVMH is similar to that of the truckers in Canada and the rising movement toward unionizing in the U.S.,” Danziger told Sourcing Journal. “During the pandemic, a new phrase entered the lexicon: essential workers. That planted the seed among those lower-level workers who do the essential work to keep businesses going—and whose work makes senior executives, company owners and investors rich—that they deserve their fair share of the products and services they produce. The genie is out of the bottle and it isn’t going to be contained.”
To the moon: prices going up, up and away
Meanwhile, the high-end label announced Tuesday that it will be raising prices on many of its coveted pieces, a result of ballooning raw material, manufacturing and transportation costs, it said.
LVMH chairman and CEO Bernard Arnault expects strong luxury demand this year, and previously said the French conglomerate is in a good position to enact “reasonable” price increases.
Erwan Rambourg, global head of consumer and retail research for HSBC, suggests that “unstoppable” LVMH has no sales ceiling, more customers to recruit and more categories to sell to them. In a report, he reiterated Arnault’s assertion that “Louis Vuitton doesn’t sell fashion or handbags, it sells culture.” This means Louis Vuitton “can sell anything, really, given its power and influence,” Rambourg added.
This inherent “pricing power” helps brands protect their margins from the ravages of inflation. Louis Vuitton joins names including Ralph Lauren, Michael Kors and Coach owner Tapestry Inc. in asking consumers to shell out more money for their premium products.
Other brands and retailers are dialing up prices, too.
A BDO 2022 Retail CFO Outlook Survey found that 55 percent of retailers plan to raise prices this year, while 38 percent already have done so. The expensive digital strategies needed to stay afloat during the worst days of the pandemic have been compounded by shipping delays, material scarcities and labor shortages. For 2022, 46 percent of retailers expect gradual, continuous growth, although revenue expectations appear to have been tempered as costs continue to rise.
Retailers that are “doing well” plan to hold a minimum of three to six months of cash, while those that are “surviving” will likely hold less than three months of cash on hand. Department stores fit into the latter category, and are investing in logistics and inventory management to minimize shipping errors and returns. Retailers that are struggling are looking at divesting noncore assets, and eyeing collaborations or partnerships to built network value in 2022.
Still, it’s the strain on supply chains—rising transportation costs, supplier risk or delays, supply shortages and higher customer expectations—that have forced retailers to raise their prices. For now, U.S. retailers haven’t faced any significant consumer blowback, though BDO survey respondents voiced concerns that a “price cliff” might be on the horizon as tickets above a certain point could cripple consumer demand.