Retail Matters Podcast: Will “Made In Italy” Survive the Next Generation?

Italy is the epicentre of luxury’s supply chain: many of the world’s biggest luxury brands rely on thousands of workshops across the country to make their best-selling products, which arrive in glittering stores emblazoned with the prestigious “Made in Italy” stamp.

But across Italy’s manufacturing sector, a crisis is playing out that threatens this critical lynchpin of the luxury ecosystem.

More than 2,000 factories making clothing, textiles and leather goods closed in the first three quarters of 2024, according to the portal for Italy’s business register, InfoCamere. Industrial output for the sector ranked among the country’s worst performing for much of last year.

The situation is the immediate result of a stinging downturn in the market that’s been compounded by inflation, scandal and incoming regulatory demands. But it also lays bare structural challenges and power imbalances the industry has danced around for years, as brands cut costs and grew profit margins, often at the expense of their suppliers, while simultaneously promoting their commitment to artisanal craft and quality.