Supply chain inflation on the whole is a headwind for luxury margins, which can be offset by raising prices, says Credit Suisse luxury analyst Ling Xie. Strong pricing power allows luxury labels to take future pricing actions if inflation keeps rising, she adds. Heavy-hitters, including Chanel, Louis Vuitton and Gucci have all raised prices this year to cope with supply chain issues. For independent labels, it’s not as simple to hike prices without established brand power and market dominance, experts agree.
It’s not just brands that are suffering, Partow wants to point out. “All the suppliers and vendors we work with, it’s a really big domino effect,” she says. “When you talk to some of the owners of the Italian mills or the factories we work with, there’ve been so many that have just broken down and cried to us.”
Challenges continue as the geo-political situation evolves
Covid-19 restrictions may be winding down across the West, but with the war in Ukraine and now Covid in China, the worst is far from over for small-to-medium sized brands.
Ninamounah produces most of its tailoring in Ukraine, just near the border of Slovenia. Currently, a large portion of its AW22 collection is stuck in a Ukrainian factory. “We’ve considered taking a van of supplies to help people and going to pick up the collection ourselves,” says Langestraat. “But the factory said it’s not safe.”
China is also a worry. So far, Ninamounah has only had one cancelled order during the pandemic, from a store in Hong Kong, due to the current Covid outbreak.
Partow doesn’t manufacture in Ukraine or China but is still feeling the effects of the geopolitical turmoil. “The world is in such flux and there’s so much that’s changed in the last two years,” she says. “There’s an empathy and an understanding in terms of what’s going on with human beings. And then at the same time, there’s this world in which we have to deliver. We all have to work together and find solutions collectively and mould the business based on what challenges are coming up at any given time.”
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