What are your thoughts, when you think of "quiet luxury"? If you had to choose words to describe it? Something like "sophisticated", "not for everyone", "polished"? If we talk about quality — most probably you'll think of "craftsmanship", "exquisite"? Is there a room for word "exploitation"?
Most probably the answer is "no". But "exploitation" is what you'll probably see under Loro Piana's latest posts in Instagram or TikTok. And it's definitely not what the brand would expect from it's positioning. Anyway, this is what Loro Piana got after not adressing the scandal they got into.
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The case is obviously hard to deal with. Very sensitive. I was following the issue for almost a month now. From the beginning I was almost 100% sure Loro Piana will step out with a statement. They didn't. After a week or so of silence in social media they posted a post in Instagram. While there are no 4000+ comments under all their new-posts, still users write not-so-preferrable word in luxury fashion — "exploatation".
I am not here to critisize or blame, I am here more to look at the case from professional point of view like communication specialist — PR and anti-crisis point of view. After all we don't have all the facts and we don't have a position of the party involved (I mean Loro Piana and LVMH). Well, almost don't have... But let's start from the beginning.
Anatomy Of Scandal
Definitions
What is Loro Piana?
Based in northern Italy, Loro Piana produces superlative textiles and luxury goods using the world's finest, rarest raw materials. The pursuit of excellence has been its mission for six generations. (*from LVMH website).
What is the connection between Loro Piana and LVMH, as well as Bernard Arnault? These names are mentioned throughout the case.
Loro Piana joined the LVMH group at the end of 2013.
Created in 1987, the LVMH Group today comprises more than 75 exceptional Maisons, each of which creates high-quality products. It is the only group present in all five major sectors of the luxury market: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry and Selective Retailing. LVMH currently employs over 213,000 people across the world and reported sales of 86.2 billion euros in 2023 (*from LVMH website).
Bernard Arnault is Chairman and CEO of LVMH Moët Hennessy – Louis Vuitton, the world’s leading luxury products group (*from LVMH website). With estimated $233b (billion, just in case:-)) he has been ranked as the world's richest person on the Forbes list 2024. This marks the second consecutive year that he has held the top position. And it was used as an irritant in a case too.
Loro Piana’s relationship with the Vicuña
I could copy the description from no.1 in the excellences list on Loro Pina website, but I will just provide you with link. It is too sugary, especially under the light of the case. Instead, let's check LVMH website.
Vicuña is one of the most expensive raw materials in the world widely used in Loro Piana creations since 90s. It comes from the fleece of a small member of camel family that lives wild in Abdes, Peru. The price for an item made of it may be up to £9-10k in UK.
And, yes, according to LVMH website, vicuña is a Loro Piana icon.
Background
On 13th March 2024 Bloomberg published an article under the title "The Vicuñas And The $9,000 Sweater". The main point of the article is:
Vicuñas, big-eyed camelids that roam the southern Andes, produce the finest and most expensive wool there is. In New York, Milan or London, the fashion house Loro Piana sells a vicuña sweater for about $9,000. Barrientos’ Indigenous community of Lucanas, whose only customer is Loro Piana, receives about $280 for an equivalent amount of fiber. That doesn’t leave enough to pay Barrientos, whose village expects her to work as a volunteer.
My Comment: Weeeell, while the title is, I would say, calm and neutral, the SEO* settings got it right. So when you Google the case, you'll see a very catchy (and manipulative) title. Let me explain my point — while social media is the place where you are free to make judgmental statements, when it comes to journalism (I mean the serious kind), any kind of statement should be supported by documents and points of view of all the parties involved. And while I do not support Loro Piana in this particular case — and we will talk about that later — I do not support any manipulative tone used in journalism, which encourages readers to follow the preferred way of thinking rather than analyzing the situation.
*to change how article appears in Google search results, its title and description may be adjustable using SEO settings (Search Engine Options) by the publisher.
Object Of Controversy
Loro Piana, which is part of LVMH, is now facing allegations of unfair labor practices and exploitation of workers involved in the production process of vicuña fiber luxury items.
Key Players & Stakeholders
Loro Piana/LVMH: at the center of the controversy, responsible for producing and selling the luxury fashion products made from vicuña.
Bernard Arnault: as the CEO of LVMH, Bernard Arnault may be considered a stakeholder due to his oversight of the company's operations and reputation.
Workers: involved in the production process, including those responsible for shearing vicuñas.
Consumers: who purchase and wear Loro Piana/LVMH products, as their perception of the brand may be impacted by the controversy.
Local community: where vicuñas are bred and sheared, as their livelihoods and well-being may be affected by the controversy.
Peruvian authorities: local and state-level, as they have a responsibility to regulate labor practices and ensure compliance with labor laws.
My notes in the margins. While the article will be more focused on the brand's crisis communication, I want to draw your attention to a few points regarding key players.
LVMH acquired Loro Piana in 2013, while the practice of incorporating vicuña into the brand's creations has been taking root since the 1990s, long before LVMH's involvement. I may assume that LVMH itself, with over 75+ brands under its management, was not aware of the day-to-day operations, including the vicuña shearing process. On the other hand, highlighting it as the brand's idol indicates heightened attention to this particular production chain.
Bernard Arnault is the richest person in the world with a net worth over $200 billion which is mentioned in an article and further in social media. The stark contrast between this immense wealth and the mere pennies paid (or even not paid) for producing super-expensive clothing once again seamlessly leads the reader to ponder the idea that "the rich are bad".
The above would be fair enough, except for one important thing that is not mentioned at all in the article: the role of authorities. Setting aside my personal emotional thoughts, let's consider a basic rule of big business: if it can save money, it will do so. This principle applies most strongly to large corporations. However, the entities that have the power to affect change are the authorities, who establish the rules. By rules, I mean minimum wages and working conditions. While it may be easier to accuse LVMH (because it's famous) or Bernard Arnault personally (because he is the richest and the contrast is emotionally (read "manipulatively") striking), I would first question the authorities on how such business practices are even possible to be mentioned in connection with the name of a country or a particular community. Authorities are obligated to always stand at the forefront of protecting the rights of those they represent.
Let's return to the case.
Media Coverage
After the article was published, Business of Fashion and DietPrada posted about it on Instagram, bringing a big attention to the case on social media.
On the other hand my research on media coverage apart from social media showed that the case was not in the spotlight of major editions.
Response
And now we are at the point of response. As mentioned before, I was sure there would be a response from the brand. What made me think so? Well, vicuña is considered to be Loro Piana's icon and is used to produce its most exclusive (and expensive) items. In a broader context, it is one of key elements of the brand's image, which is used by Loro Piana. The brand itself stands at the forefront of quiet luxury trend and encompasses such terms as craftsmanship, high standards, and quality.
Loro Piana manages all stages of production of its ready‑to‑wear collections, from the sourcing of natural fibers to the delivery of finished products to stores. Loro Piana procures its unique materials (Baby Cashmere from northern China and Mongolia, vicuña from the Andes, and extra‑fine Merino wool from Australia and New Zealand) through exclusive partnerships with suppliers all over the world. Its exquisite textiles and products are then manufactured in Italy — from LVMH universal registration document 2023 (published in March, 2024)
More widely, the need for a response was also driven by the shadow cast on LVMH and its ability to monitor compliance with work standards in its subsidiary companies, as well as on Bernard Arnault personally, as his persona may fit well into the overall speculation amidst the scandal.
Loro Piana kept silent. No press-releases were published on official website or any major media agency. There is just a statement which was sent to AFP agency and published by FashionNetwork. And while I tend to keep my judjemental thoughts on this case to myself the statement was... hm... unprofessional. Let's take a look:
We formally refute these allegations, which do not reflect the reality of the situation, the way in which vicuña wool is harvested in Peru, nor Loro Piana's real and continued commitment in favour of the local population in the last few decades
Ok. Great. The beginning looks very promising. Now they will probably give us their overview of the situation, the investigation to prove the allegations wrong? Not so fast.
With regard to the Lucanas community, the volume of Loro Piana's purchases from them is equivalent to 4% of the total quantity purchased by the label in Peru. Thanks to this harvest, the community receives from Loro Piana up to several hundred thousand dollars, on average, for their work every year.
More broadly, Loro Piana has paid nearly $20 million over the past 10 years to its Peru-based suppliers to buy vicuña yarn
Let's read between the lines. The one particular community mentioned in the article gives us only 4% of materials. We may refuse it at all. They need to thank us they are actually payed.
Wait... But the allegations themselves are more about the people personally involved in the physical process of shearing — and, I would say, those whose rights are most probably not protected — not being fairly paid or not paid at all. It is more about money being lost throughout the supply chain.
Going further:
...despite everything, aware that the situation may be challenging for some, Loro Piana will carry out initiatives on the ground in Peru to further strengthen its control of the local supply chain, in order to ensure that the sums paid to the organisations in charge of the harvesting are equitably allocated and redistributed.
Trying to ignore the slightly aggressive tone of the response, I can't shake off the arrogance of "may be challenging for some". Well, yes, it may be challenging for people doing physically demanding jobs, which, yes, may only occur a few days a year, but it could still be an additional way to provide for those who are not protected.
Moreover, mentioning the need to strengthen control over the supply chain implies that the process was not overseen in the best way to uphold the brand's stated high standards and values.
Nothing was published on social media either. Loro Piana took a break for a week or so before posting again, then pretended like nothing happened. Maybe the calculation was that the public would forget.
It might have worked a decade ago, but not in the era of social media. The public cooled off slightly, however, all new posts are always accompanied by dozens of comments with the key word that runs through sporadic excitement about the new model of shoes or bag —exploitation.
And that is it. That is the response from Loro Piana we got over a time.
The Impact & Risks
While it might be early to talk about the final impact, I may assume the following impacts:
LVMH and Loro Piana's reputation already suffers, and will continue to suffer if the allegations of unfair labor practices remain unresolved. This could lead to a loss of trust among consumers and investors, potentially affecting sales due to questions about its commitment to ethical and responsible business practices.
Talking about reputation damage let's think of Loro Piana customers. I would roughtly divide them into two groups:
Aspirational customers, who opt for recognizable brand strongly associated with luxury and status. These customers typically choose the most recognizable items from the brand, which feature logos or exude luxury due to their existing recognition. The price is around $1000, and by such items I mean caps and t-shirts, shirts with logos, and Summer Walks — from my point of view the most comfortable pair of shoes ever
Kendall Roy wears his signature look in season two of Succession. Photograph: HBO/Macall Polay
A small group of customers, who prioritize quality and craftsmanship. Let's face it, the group is extremely small, as the price tag for Loro Piana ready-to-wear on a regular basis is such that only a small circle of people can afford it
While both groups may be affected by the scandal, it will significantly depend on whether the allegations continue to gain traction, particularly on social media. This is where Loro Piana got into trouble. In an interview of its CEO, Damien Bertrand, it was mentioned that the brand has subtly shifted its strategy in a bid to become more contemporary and appeal to a wider clientele, so it draws more attention in social media. Doesn't even matter if those who comment already wear Loro Piana or not. It is not cool to wear something associated with exploitation, it is not cool to be blamed for admiring the item — and this is what happens in comments under Loro Piana posts.
May I also add, with aggressive business practices not properly addressed, it may easily be exploited by competitors — particularly for those seeking to switch to similar quality and brand positioning.
In the long term, there is a possibility of a domino effect, caused by damage to reputation, and loss of trust — one falling tile may cause the rest to fall. You never know about the black swan. So it is safe to minimize every single risk.
How To Communicate A Scandal
Definitely not like Loro Piana. I am not even sure what is worse — pretending like nothing happened on social media or a kind of aggressive update to the media agency. They lost time, they lost trust, and showed a low commitment to transparency.
If I were dealing with the issue like a communication consultant, I would make sure to follow both communication strategy and action plan. They complement each other and proceed simultaneously.
Communication Strategy
1. Initial Response: Acknowledge the Issue
Loro Piana (LP further) publicly acknowledged the allegations of unfair labor practices and took responsibility for investigating the matter thoroughly. The statement regarding the allegations may have been issued almost immediately after they were made public and were deemed serious enough to elicit a social response. Was there a response to Loro Piana's case? I believe there was. An example of such initial response:
Loro Piana takes the recent concerns regarding labor practices very seriously. As a company dedicated to upholding the highest standards of ethical conduct and corporate responsibility, we are committed to thoroughly investigating these allegations. Updates on our progress will be provided as we address these concerns. Thank you for bringing them to our attention.
Apart from committing to transparency and emphasizing core values widely used in brand positioning, the statement is perfect for three reasons:
LP addresses the concerns of those who are aware and questioning about the matter, thereby slightly calming emotions. It reassures them that the brand acknowledges the issue, shares their concern, will take further steps, and provide information in due time;
LP refrains from providing details for those who are unaware of what happened. This prompts them to further investigate, and not all readers will do so;
LP disarms competitors and those who, for any reason, are interested in ensuring that the situation is not brushed aside.
Avoiding specific timeframes and emotionally charged language in the following statement and the subsequent ones is crucial for several reasons:
Neutrality: using vague language helps maintain a neutral tone, avoiding the risk of inflaming emotions or causing unnecessary alarm among stakeholders.
Flexibility: Without committing to a timeframe, the company retains flexibility in addressing the issue and responding to developments as they unfold.
Accuracy: When the situation is still evolving or under investigation, it's crucial to avoid making premature or inaccurate statements that could damage the company's reputation or credibility.
Managing Expectations: By refraining from using emotionally charged language or promising immediate resolution, the statement helps manage stakeholders' expectations and avoids disappointment if the issue takes longer to address than initially anticipated.
Overall, using neutral and non-specific language allows the company to navigate the situation with caution, professionalism, and integrity, while maintaining trust and credibility with stakeholders.
2. Regular Updates
Which entails establishing a schedule for providing regular updates on the progress of the investigation and utilizing various communication channels such as press releases, social media, and the company website to keep stakeholders informed.
The frequency of updates significantly depends on the nature of the case and the planned investigation timeline. For example, if we are considering a three-week period, providing updates once or twice in between would be sufficient. While it is not desirable for the brand to attract even more attention, it is important to demonstrate that the company's values and policies, which are being called into question, are also upheld by the brand.
The communication channels that should be used in this particular case are social media (Instagram) and the LVMH website. Instagram is where the case exploded and continues to garner responses from users, while the LVMH website is the best place to demonstrate transparency and attention to the matter, as LVMH is a publicly listed company. The Loro Piana website itself, which could be considered to display updates, doesn't contain a news section.
As mentioned earlier, although neutral and flexible language has to be employed, it's essential to be transparent about the findings of the investigation. This includes sharing both positive and negative outcomes and addressing any questions or concerns raised by stakeholders openly and honestly.
3. Final Statement
The final statement will depend on the result of the investigation, which is to be conducted as part of the crisis case management process, and should typically include the following:
Summary of the findings of the investigation, including any evidence uncovered and conclusions drawn.
Acknowledgment of responsibility if wrongdoing is confirmed. Acknowledge the company's responsibility for any violations of ethical standards or legal requirements.
Apology: to any individuals or communities affected by the company's actions or failures to act.
Corrective actions: the specific steps the company is taking to address the issues identified, including any corrective measures implemented to prevent similar in the future.
Commitment to improvement: reaffirm the company's commitment to upholding ethical business practices, protecting the rights of workers, and fostering a culture of integrity and accountability.
Long-term vision: Share the company's vision for the future, highlighting its commitment to continuous improvement and sustainable business practices.
Conclusion: Close the statement with a reiteration of the company's commitment to accountability, transparency, and ethical conduct, expressing gratitude for the support and bringing to attention of stakeholders throughout the process.
Based on the previously mentioned information, there are two possible final statements.
Final statement if NO wrongoing was found
Loro Piana Concludes Investigation with No Evidence of Wrongdoing in Vicuña Wool Production in Peru
Loro Piana takes any allegations seriously, aligning with its brand values and policies. In response to recent information concerning labor practices, particularly regarding the production of vicuña wool in Peru, we established a special commission to conduct a thorough investigation.
The commission conducted on-site visits, reviewed documents, comprehensively interviewed employees, and conducted other relevant inquiries to ensure a comprehensive examination. Following the thorough investigation, no shortcomings were found in Loro Piana's labor practices.
We emphasize the importance of transparency and upholding high standards throughout all stages of production and oversee every aspect of our collections, from sourcing natural fibers to delivering finished products to stores. Loro Piana reaffirms its dedication to ethical business practices and the well-being of all stakeholders involved in its supply chain.
We sincerely appreciate the attention and support received during the investigation process.
That is a perfect statement. However, for the company to issue it, it must be 100% certain that it is accurate. If, after issuing a statement of a similar nature, additional details emerge that prove it to be incorrect, it could severely damage the brand's reputation.
Final statement if wrongoing was found
Loro Piana Addresses Allegations of Unfair Labor Practices
Loro Piana takes all allegations seriously, aligning with our values and policies. In response to recent information concerning labor practices, particularly regarding the production of vicuña wool in Peru, after a thorough investigation into these claims, let us share the following.
Our investigation revealed instances where labor standards did not meet our values. While the specifics of these instances are being addressed internally, we acknowledge the need for improvement in certain areas.
With our sincere apologies to all affected parties, we recognize the responsibility to uphold ethical standards throughout the supply chain and are committed to rectifying any shortcomings.
In response to the investigation, Loro Piana is implementing immediate actions. These measures include strengthening oversight mechanisms within the supply chain, including steps to follow with payroll distribution. We have also decided to provide a one-time bonus in the amount of (...) to employees directly involved in the physical process of vicuña wool harvesting.
Despite material pricing being market-driven, we have also decided to establish a minimum cost of (...) per (...).
Loro Piana remains steadfast in its commitment to upholding ethical business practices and protecting the rights of workers. The company will continue to prioritize transparency and accountability in all its operations.
We thank you for the attention brought to the matter and continued support as we take steps to improve our practices and uphold our values.
With the following statement the company would have found the room to improvement, further streghthening loyalty with being transparent and responsible business.
Action Plan
Comes hand in hand with communication, and includes
Corrective measures if wrongdoing is confirmed, take immediate corrective action to address the issues identified;
Supplier engagement which means engagement with suppliers to ensure compliance with ethical standards;
Accountability, which means detecting individuals or suppliers responsible for violations;
Long-term solutions: developing and implementing solutions to strengthen the company's supply chain management.
***
With what was written before, I take off my pink glasses and say what I really think. While I see the main responsible party to be the authorities, I may assume that the existence of such a situation was known at least to the people involved in this specific production chain as managers. Yes, Loro Piana has no direct responsibility for these socially unprotected individuals, however, based on the long-standing relationships with this community, and the special place that the product occupies in the brand's positioning, I believe they are able to change the situation somewhat by demonstrating commitment to their standards. I'll say a cynical thing, but even from the perspective of their further positioning, it's beneficial for them. And the community is small enough for it not to be too expensive of a reputational investment.
Regarding the brand's communication. Often I observe how even after some time, it is difficult for leaders or responsible individuals to admit a wrong step. Mistakes are normal; those who do nothing make no mistakes. Moreover, in any mistake or problem, which always arises at the most inconvenient moment (are there convenient moments for problems?), there is huge growth potential, and paradoxically, potential to gain new loyal clientelle. It's about turning attention from negative to positive by right communication and taking steps to improve. Did Loro Piana succeed in turning minus into plus? You know the answer.