If we learned anything from House of Gucci, it’s that the fashion biz isn’t always pretty.
Per The New York Times, several fashion houses across Europe were raided by authorities earlier this week. The move is linked to an EU antitrust probe that aims to figure out whether any big fashion players have been flirting with cartels and restrictive business practices.
- The raid is disconnected from those carried out in 2021 and 2022, which looked into price fixing tied to sustainability targets and the supply of fragrance ingredients.
Bottom line: High fashion can add ramped-up regulatory scrutiny to its list of things to worry about, along with competition from fast fashion and third-party discount retailers. Those that are found guilty of breaching rules can face fines of as much as 10% of their global turnover.
- One grey area, however, will be continuing to balance the demands of ESG and antitrust regulators, where solutions can often be at odds with each other.
- In theory, when brands collaborate on ESG policies, it can have the effect of both raising prices and reducing quantity by limiting inventory that makes it to sale racks.
Zoom out: Despite the continued demand for luxury goods, the crackdowns might spell major problems for fashion brands, especially small ones. Collaborating to solve issues will pave the way forward… just so long as those conversations steer very clear of pricing.—SB