Introduction
The topic of this blog is to examine injustices in the supply chains of luxury goods, focusing specifically on Chanel as a case study, to see if luxury can ever be sustainable. While in theory, the definition of luxury is lasting use, this doesn't necessarily translate into ethical or sustainable supply chain. Chanel is a luxury designer brand which specializes in fragrances, haute couture, and accessories. In particular, this report inspects the supply chain of the Chanel No.5 perfume, regarded as one of the most iconic and enduring luxury products of all time (Barwich and Rodriguez, 2020), (Weifang, 2011), (Ni, 2021).
Research for this blog comes primarily from academic journals but also considers wider grey literature. The supply chain of Chanel No.5 will first be assessed to show how it is currently formatted, evaluating injustices as well as various sustainable shifts which have been enacted in recent years. Afterwards, the scope broadens to evaluate Chanel’s brand image and how its supply chains and sustainability pledges align with this. Also explored is the wider impact of how Chanel as a case study can inform policy to encourage luxury brands to improve their supply chains, as well as how economic concepts may have shaped these. Chanel is an example of a brand sitting on the cusp of achieving real change, but which is not currently doing enough to ensure equality and sustainability across its supply chain.
Case study: Chanel
Chanel is a French fashion house and “one of the most famous [and recognizable] luxury brands in the world” (Ni, 2012, pp.78), (Berry, 1994). It is privately owned by the Wertheimer brothers, grandsons of Pierre Wertheimer who founded the eponymous company with Coco Chanel in 1910 (Forbes, 2023), (Donze et al, 2022). Despite being over a century old, Chanel’s growth isn’t diminishing; its brand value has risen every year except 2021 from 2017-2023 and was estimated to be worth approximately USD$15.3 billion in 2022 (Statista, 2023).
Chanel No.5 Supply Chain
The two most important components of the Chanel No.5 perfume are the jasmine and ylang-ylang flowers which this analysis focuses on.
Jasmine is harvested in Grasse, southern France, from the Mul family suppliers who Chanel has worked with since Chanel No.5’s inception (SourceMap, 2022). SourceMap (2022) investigated the conditions of the seventy workers here who are mostly migrant women of Turkish descent. The work is strenuous, and the women’s migrant status makes them susceptible to exploitation (Wright and Clibborn, 2019). Moreover, they are paid on a piecework pay system for each kilo of jasmine they collect (SourceMap, 2022), a payment structure which academics criticize the efficacy and fairness of (see Mathews, 2015; Garcia et al, 2019; and Shirom et al, 1999). Furthermore, the key criticism of piecework pay systems being that they generate low quality outputs does not align with Chanel’s reputation for being the epitome of quality and excellence (Mathers, 2015). However, in terms of environmental injustices, this part of the supply chain is reasonably environmentally conscious. The flowers are turned into a concentrate on-site (reducing transportation emissions) using solvent extraction which is relatively energy efficient compared to other methods (Source Map, 2022), (The Perfume Society, 2023). After the concentrate is extracted, it is transported to Compiegne in northern France to be further processed. This is decidedly more emitting, and while Chanel has stated that it aims to decrease transport emissions in its supply chain by 40% by 2030, transportation still represents 20% of its carbon footprint (Chanel, 2022).
The supply chain of the ylang-ylang flowers from Madagascar and Comoros has many injustices. The harvesting of ylang-ylang is mostly done by local women who are paid on a piece-rate system. Garcia et al (2019) describes piecework as an inherently insecure system, arguing that both the workers and Chanel would only benefit from a more secure payment system. Currently, there is a shortage of workers willing to gather ylang-ylang due to the intensity of the work for only, on average, €50 a month in Comoros (The National UK, 2015). This is half of the 2015 GDP per capita figure which equated to average earnings of €100 per month (World Bank, 2015). While Chanel has subsequently committed to increasing wages and improving working conditions, the positive manifestation of these promises is yet to be seen. Ylang-ylang production also raises multiple environmental degradation concerns. Ylang-ylang trees are often cut down after harvest for use in generating electricity for the on-site distilleries which turn them into a concentrate, causing deforestation and soil erosion (SourceMap, 2022). The process of subsequently flying the oils to Compiegne emits significant levels of greenhouse gases. Chanel (2022) states that it is looking to switch to sea freight where possible, and where this cannot be done, using “cargo flights on routes that produce less CO2”. However, many argue that there is no sustainable way for global supply chains to operate on such a vast scale. This is an example of what Anner (2020) and Selwyn et al (2020) describe as an injustice which is simply hard-wired into operating global supply chains. After the ingredients are transported to the Compiegne manufacturing facility, the perfume is bottled and distributed around the world. As part of Chanel’s sustainability pledges, they aim to increase their use of electric vehicles and ships rather than air cargo to reduce emissions in this part of the supply chain (SourceMap, 2022), but this is yet to be enacted.
Chanel media presentation and brand discourse
What is key to note here is that Chanel’s brand discourse and the reality of its supply chains are not always misaligned. In terms of the environmental justness of its supply chain, Chanel has quietly begun to reduce some of its negative environmental impacts. They sourced 97% of their electricity from renewable sources in 2022 and are on track to meet their target of 100% by 2025 (Chanel, 2023). Chanel is also embracing the use of recycled glass in their perfume bottles, partnering with Pochet du Dorval who specializes in recycling only the purest white glass, SEVA 3. This saves 25 tons of virgin material for every million bottles that use SEVA 3 (Groupe Pochet, 2023). Givhan (2015) discusses why these green shifts are occurring so noiselessly in the luxury industry. Givhan (2015) argues that while brands see sustainability as something that will contribute to their image as heirloom goods rather than disposable ones, “on the whole, green fashion is seen as ‘other’”, and antonymous with luxury. It appears that while Chanel seems reasonably committed to reducing ecological - but less so employment - injustices, it’s stuck in a paradox of wanting to appeal to both environmentally conscious stakeholders while simultaneously appeasing traditionalists in the luxury sphere. Unfortunately, it appears traditionalism is currently prevailing. Good On You (2023) assesses the environmental and supply chain ethicality of different companies and found Chanel to be inadequate in many ways, particularly in terms of its labour conditions. Good On You (2023) highlighted how Chanel doesn’t specify what percentage of its supply chain is audited and does not provide evidence it ensures good working conditions or adequate pay for employees. This lack of openness earned it the bottom spot on the Fashion Transparency Index in 2016 (FTI, 2016).
Critical reflection & concluding remarks
This critical reflection section explores how different economic concepts have seemingly symbiotic relationships with the perpetuation of supply chain injustices, as well as considering what could be done about it.
Commodity fetishism, a concept established by Karl Marx, explains why people still consume at such high rates in an era of heightened scrutiny of businesses and their supply chains. Cluley and Dunne (2012) say that ethically concerned customers cannot help but be aware of how commodities come to exist in the modern day, and yet at the point of consumption act as if they are oblivious - a phenomenon they coined the ‘as if’ moment. As Fleming and Spicer (2005, pp.187) put it: “[t]he enlightened consumer knows that the pair of Nikes they purchase is made under sweatshop conditions but… act as if they did not”. Billig (1999, pp.313) says this is like a kind of collective amnesia people adhere to as “the pleasures of consumerism would be routinely diminished by an awareness of the productive origins of consumer goods”. The question is therefore not ‘Do people know Chanel pays its’ flower pickers poorly’, but ‘Why do those who know not care?’. Zizek (2009) believes that people become commodity fetishists as a way to deal with the harsh realities of consumption they bear as independent consumers, imbuing the good with its’ own characteristics in order to act as if it was simply plucked from a tree in its final form (Marx, 1976). Chanel exploits this heavily, as the brand aims to obscure its supply chain while focusing on advertising itself to the consumer as a family, not a brand; a feeling, not an object (Hanke, 2015). This in turn allows them to charge high prices and exploit workers along their supply chain to save costs without it affecting most consumers’ perceptions and purchase intentions. Commodity fetishism allows Chanel and other luxury brands to transform their goods’ value from use to exchange value. Chanel No.5 performs the same purpose as a cheaper perfume, but it’s the history, reputation, and je ne sais quoi associated with the brand that entices consumers. As Kapferer (2010) says, luxury is inherently irrational, but commodity fetishism allows people to stay blind to this.
This links to the concept of brandification, which is the idea that the branding of certain products is less about the good itself and more about advertising a lifestyle, playing on the emotions of consumers (Hanke, 2015). Traditionally, luxury brands have curated an image of being for the ‘leisure class’ (Veblen, 1902), characterized by high prices, aesthetics, and rarity (Kapferer and Bastien, 2009). For example, the purpose of a luxury bag is not to carry one’s belongings but can be seen as a vessel for the owners self-worth. The bag has symbolic value to the consumer as a sign of status which makes the buyer feel good about themselves (Bauer et al, 2011), (Weifang, 2011). Thus, it is arguable that brandification is at work to a greater level here than with other goods, meaning the supply chain of products like Chanel No.5 becomes even more irrelevant to consumers.
This lack of awareness consumers have to injustices across supply chains could also be seen as related to the concept of globalization. Globalization is defined as “the intensification of worldwide interconnectivity, mobility, and imagination” (Steger et al, 2023, pp.1). There is an assumption among modern consumers that goods have international supply chains with raw material sourcing and manufacturing occurring ‘somewhere else’, without any interest as to where these activities occur or at whose expense (Fleming and Spicer, 2005), (Cluley and Dunne, 2012), (Billig, 1999). SWNS (2021) discussed research on 2000 American consumers which found that 19% admitted to knowing that products may not have been made ethically but that they purchased them anyway. This links to Lee’s (2002, pp.334) description of brands as a “spaceless concept”, meaning people are investing in a feeling not a product, and the supply chain behind goods is not only ignored but unconsidered. Consequently, Chanel is an clear example of how the concepts of commodity fetishism, brandification, and globalization afford luxury brands a certain protection from the same scrutiny applied to other companies’ supply chains.
This leads to this reports’ recommendations on what governments and non-governmental organizations (NGOs) may seek to do to address supply chain injustices across the luxury market. The power of regulation and legislation to combat issues must be considered. For example, these could be employed to mitigate the release of harmful waste products from production processes, such as how leather tanning uses heavy metals such as chromium and releases waste which is harmful to human health (Borowicz, 2020). Furthermore, rewarding companies for reducing their negative impacts is also beneficial. For example, if Chanel reaches its target of 100% renewable electricity sourcing by 2025 (Chanel, 2023), rewarding the company in some way will highlight it as an example which will hopefully inspire other brands to follow suit. Similarly, for both governments and NGOs, empowering workers along supply chains is key. With Chanel No.5, where they is already a shortage of ylang-ylang pickers, there is an opportunity for change. The flower is a principal part of the perfume, so if the already dwindling numbers of workers unionized and demanded higher pay or threatened strike action, it could leverage Chanel into increasing their wages.
However, what has been highlighted by the report is that unjust supply chains may be created by companies, but they are perpetuated by individuals (Cluley and Dunne, 2012), (Marx, 1976), (Zizek, 2009). Similar to the power workers hold to force change, if consumers boycotted an exploitative company, it would compel the business to comply. It is arguable that not all people are included by luxury brands (due to high prices being economically exclusionary), and therefore don’t see themselves as having the power to affect change on these companies. However, high-end companies are increasingly diversifying into offering lower cost goods. This can be seen with BMW offering both their traditionally expensive luxury cars (e.g., BMW M3 Sedan) but also offering lower priced cars like the BMW 1 series (Bauer et al, 2011). This is a process called masstige (mass and prestige), where products are priced significantly lower than the brand traditionally does to appeal to a wider customer base (Bauer et al, 2011). By including more people in their market, businesses have granted greater power to consumers to inspire change. Leveraging economic incentives could also be considered, such as The Perfume Shop offering discounts to customers who return empty bottles for recycling (Sillitoe, 2022). Inspiring this kind of critical consumption (Yates, 2010) among consumers is perhaps the most effective way to force change. People have to shift away from what Billig (1999, pp.313) called “collective amnesia” over the impacts of their choices to instead believe that their ignorance is not blissful, ethical, or just.
To conclude, the basic problem luxury brands face in terms of cleaning up supply chain injustices is what Bendell and Kleanthous (2007) call the inherent incompatibility between luxury and sustainability. However, it is arguable that this viewpoint is only relevant to luxury brands as they currently operate, as Kapferer (2010, pp.41) highlighted that luxury has the potential to be “the enemy of the throwaway society”. Whether it’s Chanel’s commitments to renewable energy or reducing air cargo, luxury has the opportunity to pose as the rational alternative to fast fashion and mass market industries which operate on planned obsolescence. Kapferer (2010, pp.42) argues that “luxury is the business of lasting worth”, where “90% of Porsche’s are still being driven” and “Maranello mechanics will work on any [age] Ferrari”. If Chanel were to act as a leader for the industry, it could provide a blueprint for luxury industries looking to clean up their supply chains.
Let’s all DO MORE to ensure ethicality across supply chains and sustainability built-in to all products.
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