By Dhanya Skariachan - Analysis
NEW YORK (Reuters) - From breeding their own crocodiles to tapping new low-cost centers for raw materials, luxury retailers are stepping up efforts to improve sourcing of goods, labor and expertise in the global economic slowdown.
As economic woes deprive high-end retailers of the luxury of raising their prices, many are focusing on smarter sourcing initiatives to manage costs better.
"In today's market, when something is real expensive, it doesn't mean that it is necessarily better; it just means it is more poorly sourced," U.S.-based luxury designer Jonathan Adler told the Reuters Global Luxury & Retail summits in New York this week.
While French luxury group Hermes (HRMS.PA: Quote, Profile, Research, Stock Buzz) is breeding its own crocodiles on farms in Australia to address demand for its leather bags, Adler is tapping countries such as Peru, Vietnam, India and China for raw materials like textiles and pottery.
"I think the stigma of China is waning. And I think it should, because certainly, I am a potter, and "china" is what people call their dishes. (That) is because China knows how to make stuff," Adler said.
But Edgar Huber, president of Juicy Couture -- owned by Liz Claiborne (LIZ.N: Quote, Profile, Research, Stock Buzz) -- said he was evaluating places to buy goods outside of China, citing rising wages in the most populated country.
Swiss watchmaker Parmigiani Fleurier also brooded over labor costs.
"Labor is the most expensive thing for us," Parmigiani Fleurier Chief Executive Jean-Marc Jacot said.
"If you have to cut staff, it then takes three-to-four years to restart a team," Jacot said.
British luxury car firm Rolls-Royce, owned by Germany's BMW (BMWG.DE: Quote, Profile, Research, Stock Buzz), was fortunate to have been able to maintain its full employment since laying off temporary staff last November, CEO Tom Purves said in London.
"Since then, we've kept everybody (craftspeople) on because we know we need them with the 'Ghost' (car) coming, and also because we know they are highly skilled and highly qualified and it's much better for us to retain than not," Purves said.
As it gears up to unveil its new 'Ghost' car model this September, the Sussex-based firm has maintained the number of its craftsmen despite the worldwide slump in vehicle demand.
While several luxury retailers lamented labor issues, Hermes CEO Patrick Thomas said the company's most limiting factor was sourcing of raw materials such as particular exotic skins.
"Raw materials are very difficult to source. Cashmere already is a big challenge," Thomas said in Paris.
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