Mike Redwood
Columnist
International Leather Maker
Dubai’s mega-malls only opened in the early 2000s. They now make up about 5% of global luxury sales, with brands such as Dior and Gucci an even higher figure than that. Faster future growth seemed assured, drawing diverse demographics, varying religions and ages, that promised broader attitudes to luxury value.
This is now in jeopardy. The Iran War has emptied the malls, repelled tourists and triggered a resident exodus. Even a quick end to the war will not avoid a major re-evaluation.
For the global luxury firms, timing is tough. Post-pandemic and Ukraine invasion price hikes, plus U.S. tariffs, have fuelled a consumer backlash. Perhaps this was a minor version of demand destruction that we are now seeing with current rising fuel prices? While some ultra-rich hedgers can thrive on volatility and crypto speculation, most consumers face entrenched cost-of-living crises. Long-term scars, supply chains interruptions, inflation, debt, eroded trust, will linger for years.
China offers no relief. Chinese consumers are not feeling secure enough to drive retail consumption to the required levels. They have been discouraged by losses in the property crash and anti-corruption drives curbing ostentatious purchases. As a result, the government is using huge exports from a manufacturing glut to fund growth and the Chinese consumers are seeking more value in their purchasers.
Shoppers are trading down for value
Recent luxury signals are cautious: Bentley axed 275 staff; Ferrari airlifts new cars to the Middle East for key clients. Chinese shoppers are not alone in stepping away from big logos and trading down to find better value: many experts think they may never return.
I have been reading Dana Thomas’s Deluxe: How Luxury Lost Its Lustre (2007) once again. She charts how conglomerates reshaped luxury at the end of last century. In 1987 after spotting untapped financial value Bernard Arnault quietly accumulated 43% of what became LVMH via a leveraged buyout, rising to CEO by 1989. Employing his U.S. business experience, he pioneered brand aggregation taking over Fendi, Givenchy, Bulgari, TAG Heuer, Marc Jacobs, Thomas Pink, De Beers, Sephora, and Tiffany.
Those who lived through those heady years saw brand value uniquely fused with consumerism. It coincided with luxury becoming a primary tool for projecting identity and status. The behaviour of consumers changed, and brands followed. The concept of “sacrificial purchasing” in luxury goods evolved from a literal economic trade-off to a psychological and brand-driven strategy. Consumers often “sacrificed” smaller, everyday necessities or financial security to obtain high-status items that signalled wealth and success. Even Timberland evolved from workwear to on-trend exclusive fashion and in Milan and Rome tourists were mugged for their iconic burgundy Authentic Boat Shoes.
Luxury on an industrial scale
LVMH and Kering structurally absorbed Marshallian craft districts into global value chains—not so much extracting cheap labour, but brand-embedded legitimacy, then industrialising production while leveraging that brand reputation in marketing.
Thomas calls this structural inversion: value capture shifts downstream to branding and retail, while creation stays upstream in materials and craft. Design slips from the maker to a remote head office. Arnault claims he left the brands autonomous, modernising only marketing, but value-added shifts are undeniable.
Originally family-owned and artisan-led, luxury targeted durability and product excellence whether it was a trunk, saddle or raincoat. Now conglomerates such as LVMH prioritise scale and profit. Farmers and abattoirs face low margins, volatility. Capital-intensive, scrutinised tanneries are squeezed. Makers become cost driven. Instead, the brands and retailers claim top margins and hold pricing power throughout the chain.
Not all brands have followed this path: my 40-year-old Coach bag endures, and they manage their prices with care. Hermès exemplifies resistance. Its dispersed ateliers mimic internalised Marshallian districts, high-trust craft communities. Long after Thomas wrote Deluxe the Hermès family repelled Arnault’s stake-building to defend this against quarterly logic.
It is now import for tanners to reclaim both their tacit knowledge and community duty which are both vital today amid geo-economic and climate shifts. Conglomeration downgrades historic clusters’ full-chain capabilities, from design to sale, for high-spec, high-volume production. Firms slide down the “smile curve” to mid-value manufacturing, while owners seize high-margin segments of design/brand upstream and retail downstream.
As well as tanners, makers communities suffer irreparably unless they fight. Governance via trust, obligation, apprenticeships once self-reproduced craft knowledge. Conglomerates sever this and knowledge fades. Deskilling is inevitable and some skills can be lost for ever. The favoured European glove stitch, full pique, is used in the best gloves because it is flat and strong; it is specified in some fast jet pilot gloves. But as the manufacturing transferred to Asia it was considered unsuitable for bulk production. Now only a tiny number of surviving European makers retain the skill. Traditional oak bark tanning and alum tawing for cricket ball leather are all part of the same story.
Southern Europe’s clusters resist as communities and producers stood together building their own town and regional branding and supporting institutions. In central England, Walsall saddlery battles on, but struggle with civic leaders who chase short-term gains, ignorant of the potential for current and future prosperity. Building on foundational skills that are still alive, as in Walsall, is still the best route for differentiation and growth in wealth and quality employment.
The true future lies in returning to authenticity and provenance
Modern luxury often lacks rarity, exceptionality, yet markets heritage regardlessly. The true future lies not in “near-luxury” discounts but returning to demonstrable craft authenticity: provenance and quality. Consumers will start to distinguish true leather goods from logos.
This also fits China’s premium domestic brands, where cluster/heritage stories gain traction. Luxury leather economics misaligns with production realities. Heavy advertising, celebrities, flagships stores, and global branding create tension between growth and integrity. These new owners rarely touch hides or craft, yet grab most value, leather as image, craft as narrative.
As Dana Thomas argues, too much of modern luxury captures sale-point value, shirking creation upstream. Leather exposes contradictions, physically honest, revealing true value over time. This is hard to fake at scale. Tanners; elevate products with perceptible long-term character from day one. When this is allowed and passed to the consumer the leather industry wins.
Tanners and makers should own the narrative and the brands. No one else.
mike@internationalleathermaker.com
You can find Dr Mike Redwood across social media at @michaelredwood.
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