4 ms·

You’ve basically described Hermes and Loro Piana.

pavlov 3y ago
There's a lot of small luxury companies around the world. Watchmakers in Switzerland, champagne houses in France, tailors in England, yacht builders in Finland... Even though the products are expensive, their margins aren't as insane as it might appear because the manual production truly is expensive and the workers are often lifers who are treated very well. A lot of these businesses do end up being absorbed by the big players like LVMH which grew into the most valuable company in Europe through decades of acquisitions. (The company's official name, LVMH Moët Hennessy Louis Vuitton, is itself suggestive of a merger between luxury players in unrelated markets.)
- iamacyborg 3y ago
  Sure but I'm specifically talking about two examples that've done an incredibly good job of vertical integration. I can't think of a Swiss watch company that's operating it's own mines and metalworks, for example, or a British Saville Row tailor that also owns the herds and the looms to make the cloth it then turns into clothing. Both Hermes and Loro Piana on the other hand do this (LP is owned by LVMH).
  - pavlov 3y ago
    Ah, I see. Some small luxury brands have local, very long-term supply chain relationships that effectively offer the same benefits. As in, maybe the hypothetical Finnish maker of bespoke sailboats buys all their wood from the same sawmill (ever since 1935 when the founders of the two companies went hunting in the forest where the wood still comes from). But of course only some materials can be sourced like this. A watchmaker and a mine are not in the same industrial league.
    - saalweachter 3y ago
      You might not be able to mine, but you could smelt at a much smaller scale. You could smelt your own alloys from all sorts of fancy recycled materials -- steel from warships, chrome from classic automobiles, etc etc. The goal is basically to do things that sound impressive to justify absurd prices while employing as many people possible in as good of conditions as possible.
      - iamacyborg 3y ago
        > The goal is basically to do things that sound impressive to justify absurd prices I wouldn't be quite so cynical about it, ultimately it's about having full control over the quality of the finished product. The material used in a Loro Piana cashmere sweater is on a different level to a fast fashion cashmere sweater, despite them both being "cashmere".
        saalweachter 3y ago
        I mean, I think a worker culture centered on quality craftsmanship would be important both to grow an appealing brand, and also to have a healthy work environment where you feel like you're doing something worthwhile, but a little bit of cynicism is warranted. We're brainstorming ideas to get money away from the mega-rich and into the hands of the working class. There are going to be a number of steps where cheaply mass-produced parts are both economical and as good (or better!) than the handmade equivalents, but if you can add more manual labor into the process (without sacrificing quality or making a job that no-one wants to do), it's all the better for the ultimate goal.
    - iamacyborg 3y ago
      Yeah there are certainly some industries that lend themselves to this more than others. For example, it makes sense for Loro Piana to own Cashmere goat herds so that they can have the best possible supply of cashmere for their knitwear. Hermes own cattle farms for the same reason, they can remove things like barbed wire from their fields which can cause damage to the finished product. Goat and cattle herding aren't yet an industrial process like making certain grades of steel or making glass bottles (for the champagne producer) though, so while it makes sense for vertical integration in some areas, it might not in others.

There's a lot of small luxury companies around the world. Watchmakers in Switzerland, champagne houses in France, tailors in England, yacht builders in Finland... Even though the products are expensive, their margins aren't as insane as it might appear because the manual production truly is expensive and the workers are often lifers who are treated very well. A lot of these businesses do end up being absorbed by the big players like LVMH which grew into the most valuable company in Europe through decades of acquisitions. (The company's official name, LVMH Moët Hennessy Louis Vuitton, is itself suggestive of a merger between luxury players in unrelated markets.)

iamacyborg 3y ago
Sure but I'm specifically talking about two examples that've done an incredibly good job of vertical integration. I can't think of a Swiss watch company that's operating it's own mines and metalworks, for example, or a British Saville Row tailor that also owns the herds and the looms to make the cloth it then turns into clothing. Both Hermes and Loro Piana on the other hand do this (LP is owned by LVMH).
- pavlov 3y ago
  Ah, I see. Some small luxury brands have local, very long-term supply chain relationships that effectively offer the same benefits. As in, maybe the hypothetical Finnish maker of bespoke sailboats buys all their wood from the same sawmill (ever since 1935 when the founders of the two companies went hunting in the forest where the wood still comes from). But of course only some materials can be sourced like this. A watchmaker and a mine are not in the same industrial league.
  - saalweachter 3y ago
    You might not be able to mine, but you could smelt at a much smaller scale. You could smelt your own alloys from all sorts of fancy recycled materials -- steel from warships, chrome from classic automobiles, etc etc. The goal is basically to do things that sound impressive to justify absurd prices while employing as many people possible in as good of conditions as possible.
    - iamacyborg 3y ago
      > The goal is basically to do things that sound impressive to justify absurd prices I wouldn't be quite so cynical about it, ultimately it's about having full control over the quality of the finished product. The material used in a Loro Piana cashmere sweater is on a different level to a fast fashion cashmere sweater, despite them both being "cashmere".
      - saalweachter 3y ago
        I mean, I think a worker culture centered on quality craftsmanship would be important both to grow an appealing brand, and also to have a healthy work environment where you feel like you're doing something worthwhile, but a little bit of cynicism is warranted. We're brainstorming ideas to get money away from the mega-rich and into the hands of the working class. There are going to be a number of steps where cheaply mass-produced parts are both economical and as good (or better!) than the handmade equivalents, but if you can add more manual labor into the process (without sacrificing quality or making a job that no-one wants to do), it's all the better for the ultimate goal.
  - iamacyborg 3y ago
    Yeah there are certainly some industries that lend themselves to this more than others. For example, it makes sense for Loro Piana to own Cashmere goat herds so that they can have the best possible supply of cashmere for their knitwear. Hermes own cattle farms for the same reason, they can remove things like barbed wire from their fields which can cause damage to the finished product. Goat and cattle herding aren't yet an industrial process like making certain grades of steel or making glass bottles (for the champagne producer) though, so while it makes sense for vertical integration in some areas, it might not in others.