The study will mainly focus on the luxury fashion industry, a typical sector of the luxury market. The second chapter will provide the necessary background information on the development of the French luxury fashion industry. Four dimensions determine which of two specific types of capitalism an economy falls into: liberal market economies or coordinated market economies.
The first of the two main varieties of capitalism outlined by Hall and Soskice are called liberal market economies. As a result of management having a lot of power in business, unions are not extremely widespread in liberal market economies. Managers are concerned that strong unions will harm the manager's authority.
That said, the fluid nature of the workforce in liberal market economies means that workers can simply quit and move on if they're not satisfied. The second of the two main varieties of capitalism is the coordinated market economy model, which is less market-driven and more focused on the coordination of non-market factors. Yet the methods by which these countries approach each dimension of capitalism are not sufficiently aligned with liberal market economies or coordinated market economies to place that country under either of the two existing categories.
The variety of pre-World War II French capitalism fits firmly into the state-led category of Hall and Soskice's framework.
French Fashion
In a move to consolidate his court and further centralize that power, Louis XIV moved the French court twenty miles from the city of Paris to Versailles. Rose Bertin, her favorite designer and dressmaker of the time, held this post until the fall of the monarchy.68. France commissioned the design, inspired by a regional fashion house, to become the official uniform of the French navy in 1858.
Later, just before the Belle Époque era, a British man named Charles-Fredrick Worth changed the literal name of the game into fashion for generations to come. In the Belle Époque era of France, the invention and survival of haute couture in France's capital attracted countless seamstresses and dressmakers of the time to Paris. At the turn of the century, France held on to status as the focal point of fashion, while at the same time forever changing the constraints of women's dress.
The 1910s and 1920s saw the introduction of the legendary Coco Chanel and her new corsetless movement-free clothing for women. German occupation and massive wartime textile rationing caused many of the most important French fashion houses, including Chanel, to close their doors. Yves Saint Laurent was the first French couturier to produce prét-a-porter fashion, and his model demonstrated a new era of French fashion: keeping designs and brands authentic to their couture background while matching the scale of production in the United States .75.
Copyright and patent law were failing to protect designers, but in the early 1950s the Chambre Syndicale as well as some of the leading French designers of the time began to push back against the "era of strikes."76 People were caught disrespecting entry fee of designer shows or reproduction materials under copywriting were sent to the highest level courts in their respective countries of origin. The key to the success of French fashion brands such as Louis Vuitton, Hermès and Chanel is thanks to a multitude of factors, both in the internal structure of the brands and in the foreign policies of the state. These factors include the use of savoir faire, attention to craftsmanship and specific French brand management.
Many scholars attribute the creation of the concept of luxury to France, dating back to the Sun King, who established a guild system to support the luxury industry.81 France was also responsible for the creation of haute couture. It wasn't until the end of the dirigiste era, when the introduction of "affordable luxury" began to develop, that French companies were forced to start looking for other ways to support their dominance in the industry. Fashion was forced to react to change, but the necessary changes were facilitated by changes that occurred outside the fashion community.
Luxury
Vogue, a magazine that has turned showcasing luxury fashion into a business, offers a fairly comprehensive explanation of the luxury fashion industry. In the remainder of the study, several major luxury fashion companies will be mentioned and used as references. Three of the six will serve as examples for the company's country of origin in the comparison analysis: Hermès for France, Hugo Boss for Germany and Burberry for Great Britain.
Kering differs from the others in that the roots of the luxury fashion sector are not as firmly planted in France as they are in the case of the other three French companies. Founded in 1909 with the eponymous Gertrude (Coco) Chanel, the company flourished due to the creative genius of the creative head as well as venture capital contributed by the Wertheimer family. Burberry's first focus in the nineteenth century centered on specialist outerwear, such as the iconic trench coat - a design and innovative textile of the brand's own manufacture.
An increasing importance emerged for these art directors to also act as a face of the house. Examples of the movement for directors to act as ambassadors are people like Tom Ford or Karl Lagerfeld. After recruiting the talent – such as art directors – fashion houses must focus on the brand of the house.
It is the art director's job to manage current branding to honor the house's heritage and keep up with the trends of the times. Brand management deals with the engineering of garments, textiles, aesthetics and design of the brand.103. Hermès is predominantly known in the luxury fashion community as the epitome of a luxury brand due to the diligence put into maintaining the heritage of the Hermès brand.
Despite being founded on the ground-breaking innovation of the breathable and waterproof fabric Gabardine, Burberry is not now, nor has it been in the past, on the Forbes list. Along with the digital age, the modern climate of the industry ushered in the need for a more vertical business model. Maintaining control over the value chain and distribution constitutes the vertical integration necessary for a luxury fashion firm, as well as refraining from issuing licenses.
The representation of the other two needs of luxury – talent harvesting and innovation – are not so easy to quantify. However, Hermès is the most in line with the law because production has never left France, nor has the company given up control of the value chain or distribution.
Connecting Varieties of Capitalism to Luxury Fashion
The only other conglomerate of the same size of Kering and LVMH is Richemont in Switzerland, but Richemont's focus is mainly on jewelery with houses like Cartier running the show (It is also worth mentioning that Cartier itself as a French brand, as well as more than a quarter of all Richemont's houses.). While France scaled back large amounts of the state-led system, the state introduced industrial policies aimed at helping small to medium enterprises. The overall objective of IFCIC is to allow cultural and creative sectors to obtain bank financing.120 The corporate governance sector of the new French system allowed the financing of the new small and medium-sized enterprises.
Luxury fashion is an industry characterized by a need for coordination, and the shift in the 1980s increased coordination between companies across France. The French system is characterized by the extent of coordination between the different parts of the value chain. At the top of the business side of the luxury fashion industry are CEOs such as Bernard Arnault, Francois-Henri Pinault and Axel Dumas (LVMH, Kering and Hermès respectively) who were all educated at the most prestigious grandes écoles in France.
119 Julien Neuville, "New life in Paris", The Business of Fashion, 2015, https://www.businessoffashion.com/articles/intelligence/new-life-in-paris. After schooling, there is a tendency for these designers to train under one of the established brands such as Dior, Givenchy, etc. As for technically "lower-skilled" workers, such as those responsible for the production of physical pieces in supplier firms such as tanneries, textile manufacturing, and sewing, firms provide vocational training to maintain vertically integrated production and ensure quality.121 Vocational training of the French version of capitalism matches the needs of the French luxury fashion industry.
French companies are not only at the forefront of the industry financially, but also at the forefront of the minds of luxury consumers around the world. The French cultivation of the concept of luxury is the basis of their position in the industry. In more modern times, post-war France was characterized by a strong state-led variant of capitalism, but when the global shift in capitalism occurred in the 1980s, France was forced to move towards a state-reinforced variant.
It is the combination of history and modern changes that gives French luxury its strength in the modern luxury fashion market. 34; The Coevolution of New Organizational Forms in the Fashion Industry: A Historical and Comparative Study of France, Italy, and the United States". American Mass.
