Business of Beauty
Italy Lost Over 2,000 Luxury Factories in Nine Months
Italy's luxury manufacturing sector lost over 2,000 factories in early 2024, while suppliers like Gruppo Florence build new models and brands rethink compliance, China sales and marketing venues.
More than 2,000 factories closed in Italy's key luxury manufacturing sector in the first three quarters of 2024, according to a Business of Fashion report on the pressures reshaping the country's supply chain.
The closures strike at the production base that serves Italy's fashion and beauty industries. Suppliers that survive face shrinking order books, tighter margins and heightened scrutiny from the brands they serve.
That scrutiny has intensified. Luxury's biggest brands have tightened supplier oversight since a sweatshops scandal threatened to taint their reputations, the report states. But critics say compliance efforts have stalled, and little has been done to tackle the systemic issues that enable labour exploitation.
The gap between brand-level compliance programs and conditions on the factory floor remains the central unresolved tension in Italian luxury production. For beauty and fashion houses that market Italian craftsmanship as a premium, the manufacturing contraction poses a direct reputational question: who will make the products, and under what conditions?
One supplier is betting on scale as an answer. Gruppo Florence, an innovative supplier cited in the report, is developing new models to navigate the pressures of a changing market. Consolidation of this kind could give larger suppliers the resources to absorb compliance costs and invest in production capabilities that smaller workshops cannot sustain.
The Italian manufacturing crisis does not exist in isolation. It runs parallel to upheaval in how beauty products reach consumers in Asia.
For nearly a decade, Li Jiaqi has been the face of China's livestream shopping industry. He is famed for selling a billion dollars worth of beauty products, the report notes. Despite slowing growth and artificial intelligence reshaping the sector, he bets live selling will still depend on people like him.
His position matters for European beauty. Livestream commerce remains one of the most powerful sales channels for international brands in China, and the role of top hosts like Li Jiaqi determines how those brands allocate marketing budgets. If human sellers retain their centrality even as AI tools spread, the economics of influencer-driven beauty sales in China stay anchored to a small group of personalities.
Brands are also rewriting the playbook on where they market. Gourmet grocers have become an unlikely marketing partner for fashion and beauty brands looking to deliver novelty and experience in a crowded marketing landscape, according to BoF marketing correspondent Haley Crawford, who discussed the trend with Sheena Butler-Young.
The grocery tie-in reflects a broader search for retail environments that promise genuine experience rather than another photo op. Crawford flags the risk that these partnerships become exactly that — just another photo op — if brands treat them as backdrop rather than engagement.
Taken together, the report sketches an industry adjusting on three fronts at once: production, distribution and marketing. Italian manufacturing is contracting and consolidating. Chinese commerce is slowing even as its biggest personalities double down on the human element of selling. And Western brands are experimenting with unconventional venues to cut through marketing noise.
For beauty specifically, the Italian factory closures carry the most immediate weight. Italian suppliers form a significant part of the European cosmetics and fragrance production ecosystem, and the loss of more than 2,000 factories in nine months will force brands to reassess sourcing strategies in 2025.
Whether Gruppo Florence's model of consolidated, better-resourced manufacturing becomes the industry standard — or whether the systemic labour issues critics say remain unaddressed persist — will shape both the supply and the reputation of "Made in Italy" beauty in the years ahead.
Source: Business of Fashion
Daniel Okafor
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News editor covering business strategy at Eurasian Beauty Journal.
