Better play: Luxury or low-end retailer
Bill Tancer, Experian Marketing Services managing director of global research, and Burt Flickinger, Strategic Resource Insight Group managing director, discuss the disparity between luxury and low-end retailers. Flickinger explains why Wal-Mart is in deep trouble.
Bodin-Joyeux is the first tannery Chanel has acquired, employing 100 people in central France. It is one of its main suppliers of supple lamb leather, known for its silky feel and used to make the brand's popular 1,500-euro quilt leather bags.
Bruno Pavlovsky, chairman of Chanel's fashion business, said the brand had been working with the tannery for 30 years and would continue to supply rivals as other Chanel suppliers already do.
(Read more: Holiday spending highlights US wealth gap: Nomura[1] )
"Bodin-Joyeux are lambskin specialists and we wanted to protect and preserve their know-how,'' Pavlovsky told Reuters in an interview. Financial details of the transaction were not disclosed.
Pavlovsky said Chanel still relied on about 15 different tanneries and noted that the average price of high quality lamb leather was rising as people were eating less meat and demand kept growing—a trend which also applied to calf hides.
Pavlovsky estimated the price of lamb skin had risen by about 25-30 percent in the past three to five years, about the same order as for calf leather.
"We are eating less meat yet there is more demand and production is not rising,'' Pavlovsky said.
Chanel, which started buying up partners in the late 1980s, today owns several niche fashion suppliers including Lesage, the feather specialist Lemarie, the hat maker Maison Michel and the glove-maker Causse.
Last year, it acquired the Scottish cashmere company Barrie Knitwear.
(Read more: The real facts about inequality[2] )
Gucci[3] -owner Kering, Hermes and LVMH have also been buying up tanneries in an effort better to control their supply chain. Recently, Hermes and LVMH even bought crocodile farms.
—By Reuters
References
- ^ Holiday spending highlights US wealth gap: Nomura (www.cnbc.com)
- ^ The real facts about inequality (www.cnbc.com)
- ^ Gucci (data.cnbc.com)
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