↑

The luxury sector’s shift towards higher volumes and greater product ranges has increased reliance on outsourced manufacturing, particularly for ready-to-wear garments, with multiple tiers of subcontractors. Italy’s textile sector is highly fragmented, with many small factories spread across regions, leaving suppliers with limited bargaining power compared to global brands. Many rely on migrant workers, often on part-time contracts and outside union protection, in a system with no statutory minimum wage and enforcement largely via sector-specific collective bargaining.

In June 2024, Italian authorities placed a Dior subsidiary under judicial supervision after uncovering labour exploitation among its suppliers, including ‘ghost’ suppliers operating outside the law and using undocumented migrant workers. Similar findings led to enforcement action against LVMH’s Loro Piana brand approximately one year later. Italian operating companies behind the Maisons of Dior and Loro Piana have since been subject to judicial administration, in which a court-appointed commissioner sits within the company for up to a year, reviewing procurement, supplier selection and audit processes, and reporting to the court. It provides the state with a direct view into how orders are placed and who actually performs the manufacturing, beyond mere code-of-conduct statements.

Italian operating companies behind the Maisons of Dior and Loro Piana have since been subject to judicial administration, in which a court-appointed commissioner sits within the company for up to a year, reviewing procurement, supplier selection and audit processes, and reporting to the court. It provides the state with a direct view into how orders are placed and who actually performs the manufacturing, beyond mere code-of-conduct statements.

Although the ‘Made in Italy’ label has been synonymous with quality and craftsmanship, these scandals exposed a fragmented supply chain that is open to exploitation. Against this backdrop, we consulted external experts in 2024 to understand the structural challenges, then engaged directly with LVMH in 2025, focusing on audit integrity, industry collaboration and the benefits and trade-offs of vertical integration.