Unprecedented challenges in the production and supply chain leading to extraordinary solidarity by the Luxury industry
The Fashion and Luxury industry is being attacked on several fronts: containment in China led to bottlenecks in the production and supply chain, retail stores are closed and the surge in e-commerce sales is benefiting more daily and “essential” products such as food and toilet paper rather than clothes or accessories. For many businesses in the sector, the crisis will have a strong financial impact. As an example, a month’s closure of Boulevard Haussmann’s department stores, Galeries Lafayette and Printemps, would translate into 83 million euros in lost revenue.
Factories on the French soil are also shut down indefinitely. Rather than wait for a reopening date which has yet to be made public, Chanel, along with Hermès, Kering, LVMH and all the main players in the French luxury industry decided to take action and dedicate their production facilities to the “war effort”.
“Europe is now the epicenter of the Covid-19 pandemic and France has been severely impacted by the virus. Home to LVMH and the majority of its Maisons, France needs help from every possible source and the Group is pursuing numerous solidarity initiatives.”
Gearing up hospitals: when dresses and perfumes become protective gowns and hand sanitizers
Hospitals all over France and Europe are in need of essential medical supplies and equipment. According to the French Health Minister Olivier Veran, the country goes through 40 million masks a week, so every mask counts. French luxury giants are mobilizing their factories and teams to produce protective masks and gowns and hydroalcoholic gel to fill critical shortages of protective materials.
The French workshops of the Kering companies Balenciaga and Saint Laurent have started to produce surgical masks. They promised the health services three million of them. L’Oréal has adapted its La Roche-Posay and Garnier production lines to produce hydroalcoholic gel. Hermès has already delivered more than 30 tons of hydroalcoholic gel and more than 31,000 protective masks. At Chanel, 150 seamstresses and dressmakers from the Haute Couture, Ready-to-Wear and Art Houses stopped sewing designer pieces for protective face masks and gowns instead.
Pitching in too, LVMH, started to produce “as much [hydroalcoholic] gel as needed to support the public authorities” at three of its French production sites usually dedicated to perfumes and cosmetics: Dior, Guerlain and Givenchy. The gel has been delivered daily, free of charge, to the French health authorities, and as a priority to the AP-HP, Assistance Publique – Hôpitaux de Paris, the public hospital system of Paris.
Louis Vuitton, meanwhile, has employed 300 artisans to manufacture hundreds of thousands of non-surgical face masks in its French factories to be distributed to individuals in need, including elders in nursing homes.
Acting responsibly by relieving the public financial effort
As the French Government launched financial support measures for businesses all over the country, Luxury brands announced that they will act responsibly, refusing to add further weight on the welfare state.
Chanel said it would not be putting any of its 8,500 employees into temporary unemployment (a measure set up by the Government in order to help companies weather the storm) for a period of 8 weeks even if it foresees a sharp downtown in its economic activity.
“This decision is part of our responsible solidarity plan. Because the French state will have other priorities. He will have to come to the rescue of companies in difficulty”
In press releases published on March 30, Hermès and L’Oréal also stated that they would ensure a 100% continuity of employment and salaries for their employees in France and abroad (which represents nearly 15,500 people for Hermès and 13,400 for L’Oréal, including more than 3,000 currently deprived of activity).
Chipping in: financing initiatives to fight against Covid-19
Some of them are not only refusing the recourse to exceptional public aid, they are also chipping in.
Before moving into production, Chanel had donated more than 50,000 face masks to a number of hospitals, firefighters, the police and the gendarmerie (military force with police duties), while LVMH was mobilizing its networks, particularly in China, to respond to the shortage of masks for healthcare workers. The first delivery of 10 million masks (on a total of 40 million), worth around €5M, was transported from China by an Air France cargo plane chartered by Bolloré Logistics.
As the largest medical system in France, AP-HP (Assistance Publique – Hôpitaux de Paris) concentrates most of the financial efforts: Hermès announced that it will make a €20M donation, while Kering is involved in the financing of “3D COVID”, a critical equipment for caregivers and patients” program in partnership with University of Paris.
“The power of public-private partnership in times of crisis is a synergy that allows efficiency to be combined with great responsiveness"
Chanel pledged €1.2M to the emergency fund created by Fondation de l’AP-HP, the Fondation Georges Pompidou and the SAMU (French emergency services). The donation will be used to support hospital workers who have been on the front line since the start of the epidemic in France. Kering also made a financial donation of an undisclosed amount to the Institut Pasteur to support research on Covid-19.
Since the beginning of this unprecedented crisis which put economies on a halt, overburdening healthcare systems and profoundly altering our daily life, French luxury groups and fashion brands have joined the fight by providing crucial supplies and donating millions to research or nonprofit to support the relief efforts.
The Paris Region is proud of their engagement and is thanking all private initiatives helping us reach the resolution of this crisis.