Cost transparency is coming to a new industry: luxury bags.
Oliver Cabell, a travel and leather goods designer brand, is set to launch later in the summer and is offering Everlane-style price transparency in a much higher-priced market.
Founded by Scott Gabrielson, who came up with the idea after a garment factory in Bangladesh collapsed, killing over a 1,000 people in 2013, Oliver Cabell will sell bags made in Italian factories with good working conditions — without the markup.
“The luxury space is broken,” said Gabrielson. “Designer brands are succumbing to the fast fashion movement, and a handful of conglomerates control the industry.” The luxury industry is estimated at $220 billion — and about 75 percent of it, says Gabrielson, is controlled by big brands like LVMH, Kering and Richemont. High-end accessories have increased in price at about 15 percent annually (despite only a 2 percent growth in inflation,) making the space prone for disruption.
That is, in part, because most brands tend to make bits and pieces of the products in different markets — in some cases making 90 percent of a product in factories in Asia but finishing it in Italy to claim it as Italian-made. For example, Hermes often focuses on its “French” heritage, but gets materials from places like Nepal and Monglia. It’s not illegal, but Gabrielson said that these brands have a lot of power — they own factories and lobbyists — which enable them to charge a lot for their products.
So he wants to upend the industry. Oliver Cabell will sell bags at about $200 to $300 that would retail for $900 to $1,800 with the 12 to 20-times markeup common in the space. And all of it would be open for consumers: Already on its website, it shows the amount it costs to make a designer bag — and the “honest” retail price ($200) compared with the “actual” retail price ($970.)
Oliver Cabell is part of a growing coterie of fashion startups and brands that are answering consumer calls for increased transparency. Everlane, for example, has a decidedly do-gooder strategy: the online only shop shows you exactly the costs of labor, materials and logistics that went into your product so you know why you’re paying what you do. Honest by, an all-apparel and shoes company calls itself the world’s first “100 percent transparent company,” and shares a full cost breakdown of products — including the store mark-up.
Even bigger companies like Amazon competitor Jet.com has made transparency a core tenet of its marketing — which is why, it says, it can sell products for 10 to 15 percent lower than other places.
According to the Cassandra Report, 75 percent of U.S. youth appreciate brands that encourage them to curb over-consumption and 90 percent think it’s just as important for a brand to be transparent as it is socially conscious. “Companies that share how they’re innovating and improving practices within their control—not just slapping a bandage on external problems they might have little sway over—will have success engaging Millennials and Gen Z,” the report said.
Turns out, it’s not easy to pull off: Gabrielson said one of the hardest parts was getting through to factories in Italy that weren’t used to having their processes questioned. “Getting introductions was near impossible, and we asked friends of friends of friends to do it.” The brand works with freelance designers all over Europe, he said, and with only three factories in Italy. “A big brand is typically so opaque,” he said. “It’s typical of this industry to take a lot of time to build relationships.”