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It’s no more ‘burn, baby, burn’ for Burberry
Bowing to environmental groups, Burberry committed last week to cease the practice of destroying unsold products. The move comes after the fashion house admitted in its annual report in July that it burned $37 million worth of inventory it deemed unsellable last year.
“Modern luxury means being socially and environmentally responsible,” said
Marco Gobbetti, Burberry’s CEO, in a statement.
The destroyed products were generally those that did not sell via discount outlets and were more than five years old. Burberry said in its statement that it already reuses, repairs, donates or recycles unsaleable products and would expand on these efforts. A strategy to produce fewer, more targeted collections is also expected to reduce excess stock.
The revelation of its wastefulness in July from Burberry sparked a furor over such practices in the fashion industry and came only months after Richemont, the owner of Cartier and Montblanc, revealed it bought back unsold stock from retailers during a recent downturn and recycled the precious metals and stones used in the high-end pieces.
Destroying unsold goods or burying them in landfills is said to remain a common practice as luxury brands seek to maintain their exclusivity and avoid having inventory wind up in outlet stores or secondary “grey” markets.
“We do not like to sell our goods in discounted stores,” Niccolò Ricci, CEO of the Stefano Ricci, the Italian high-end menswear label, told The Wall Street Journal. “It’s giving respect to the clients and the workers.”
Stefano Ricci also earns a tax credit for destroying stock.
Luca Solc, an analyst at Exane BNP Paribas, told Reuters that Burberry’s move may force other fashion houses to be more transparent about how they dispose of unsold stock.
Burberry also followed Gucci, Yoox Net-a-Porter, Versace and others in announcing it was ending the use of fur. The decisions come as younger generations are placing a high priority on ethical and sustainable practices.
- Burberry Ends Practice Of Destroying Unsaleable Products – Burberry
- Burberry ends bonfire of the luxuries after waste outcry – Reuters
- Luxury brands including Burberry burn stock worth millions – The Times
- Why Luxury Brands Burn Their Own Goods – The Wall Street Journal
- Burberry burns bags, clothes and perfume worth millions – BBC
Discussion Questions
DISCUSSION QUESTIONS: Is it acceptable for luxury brands to destroy unsold stock to maintain product scarcity? Did Burberry make the right move, and do you see other luxury brands making the same commitment?
Poll
BrainTrust
Nikki Baird
VP of Strategy, Aptos
Sky Rota
CEO, GenZinsider.com
“Stefano Ricci also earns a tax credit for destroying stock.” That’s part of the problem, but widespread consumer backlash against the kind of wasteful practices we’ve seen in the industry can act as a counterbalance. Retailers and design houses know that customers are watching.
While I understand the desire to “protect the brand,” this is totally wasteful. Burning especially — so much for carbon, there. In my opinion, brands simply are not trying hard enough. Even if you don’t want to hand out luxury labels to “the poor,” the least you can do is spend some effort figuring out some other way of using the materials rather than just trashing it or, worse, burning it.
I’ve had pointed things to say about luxury brands needing to become more politically and ecologically conscious in ways they’ve never had to before. The conventional thinking is that luxury doesn’t have to care, but if you’re going to sell to the next generations of consumers, you’d better care. Because they do. Even if they can’t buy your products today, they can still raise a ruckus on social media and in the public square — as Burberry discovered.
I agree, Nikki. Next-Gen consumers won’t be interested in fashion houses that knowingly waste product in an attempt to maintain scarcity and, frankly, I’m shocked that Burberry has gotten away with it while retaining their brand image for this long.
It’s a new era in luxury fashion … one of accountability. The better a customer can feel about buying a product as pertains to its global impact on the word, the more successful the business. Brands like Stella McCartney are setting the pace for the industry. I’m fascinated to see such positive evolution in a sector which we were told would never change.
I can understand the desire to protect the brand and a vendor wanting to make sure that unsold merchandise doesn’t get discounted and found in outlets or off-price stores. However we are looking at severe waste, and that’s unfortunate. When you see all the needy people throughout the world, it’s clear there are better uses for the unsold merchandise through donations, and the vendors will still get the tax write-off. It is true that Burberry says they are already donating some merchandise, but with a little effort I believe they can find uses for most if not all of their unsold goods. If need be, Burberry and other vendors can add a label or some marking to differentiate the donated merchandise from the products sold in the luxury stores. Be a little creative and I’m sure Burberry and other luxury vendors can find many uses for their unsold products.
It’s hard to believe that a credible brand like Burberry would one: destroy unsold inventory and two: voluntarily admit to doing so in their annual report. It’s the apparel equivalent of deBeers controlling the supply of diamonds in order to inflate prices and diamond valuations. This practice insults the intelligence and core sensibilities of Millennial and younger buyers. This will further erode Burberry’s brand and future viability. Marie Antoinette must have been wearing Burberry when she said, ” … let them eat cake.”
Excess stock is a function of buying incorrectly, missing the mark on design or misjudging demand. Admittedly getting all these things in balance is tough, but luxury retailers need to get better at it. Shorter production runs and more limited edition capsule collections are part of the answer.
Where there is an excess of inventory, it is the right of fashion houses to protect their brands. However, there are surely better ways of doing this than burning.
Right on, Neil! Luxury must solve the same issues as do all other lines of trade.
Scarcity is the essence of luxury goods. Yes it makes sense to maintain that scarcity, however there are smarter ways than burning goods. For example, nobody would have taken exception to Burberry recycling their clothes as H&M does. Take the fabric, shred it and have it turned into washcloths, towels and other lower-level goods.
Burberry has made the right move by committing to stopping the burn cycle. Retail sustainability is becoming more important to the industry. I’m glad Burberry has made a change.
It is simply not acceptable for luxury brands (or anyone) to destroy unsold stock to maintain product scarcity! Both the practice (of burning the product) and the reason for it (product scarcity) are completely anathema to our societal values. Other brands should immediately make the same commitment — or be ostracized or worse — in today’s and tomorrow’s world.
Exclusivity by burning, wasting resources, polluting … That’s not going to fly today! In fact, even luxury clientele have a conscience. Fueled by tax credits! Are you kidding? Luxury in itself is pretentious; a turn off to new generations. Exclusivity is no longer is a selling point justified by the few blessed with money to burn.
While I understand Burberry’s desire for exclusivity and protecting its brand, I am also shaking my head at how the company disposes of unsold goods. And that it receives a tax credit for doing so.
Companies today are having to make real changes, the world is watching and it’s not afraid to call you out.
It is not true that the younger generation is turning its back on luxury. Gucci’s recent success alone belies that idea. Scarcity is the point of luxury and the top brands will continue to ensure that scarcity. The change will be in how they do this. Not by selling excess through discounters, and it’s no longer easily done through incineration or putting it into landfill, but by recycling and reusing the elements of the excess garments.
Burberry’s decision is smart, but reversing an annual destruction of $37 million worth of product to zero won’t happen easily.
Protecting brand exclusivity is likely only a secondary, at best, factor behind the burn. If exclusivity was truly key, they would produce much less. The tax breaks and cost of storing excess stock are the real reasons behind the burn and brands need to have their bottom line threatened – i.e customers taking a stand and boycotting – before they’ll seek less wasteful alternatives.
Destroying product is part of the luxury myth. It’s not wasteful if you understand luxury. After all, luxury is about emotion, exclusivity and brand.
Burberry is particularly sensitive. Here’s a blurb from The Telegraph, Nov 28, 2004: Burberry, the luxury goods group, has seen a sharp decline in UK sales due to the popularity of its trademark camel check among so-called ‘chavs’, a pejorative term for a low-income social group obsessed with brand names, cheap jewellery and football.”
True luxury brands subscribe to pillars of luxury which include scarcity, craftsmanship, heritage and provenance. Each pillar is consistent with caring about our world politically and ecologically. They generally live above the fray because graciousness is inherent in how they see the world.
Lastly, it’s still a business. Executives in luxury don’t like to destroy product any more than an executive in mass. However, the opposite risks destroying their brand.
Wow! This is shocking. The first time I’m hearing about the burning of unsold inventory, but I’m only 14 and getting an education on the fly. “Burberry said in its statement that it already reuses, repairs, donates or recycles unsaleable products and would expand on these efforts.” Yet still burned $37 million worth of clothes?! I’m thinking you need to be donating way more than you do! How does one earn a stock credit for destroying stock? How about the tax credit for donating? I can’t believe this has gone on, doesn’t anyone know there are people out there with no clothes? How has no one done anything to stop this horrific practice of burning perfectly fine goods?
“We do not like to sell our goods in discounted stores.” For goodness sake just cut the tags out and give the goods to people who need them! No one will know it’s not a knock off!
One more thing, I’m thinking the people doing the $37 million in overbuying or ordering, etc. are the ones who need to be fired! Who is keeping track of inventory projections? Once again I’m thinking they have zero idea what they are doing!
This is absolutely ridiculous! Someone better get into these companies & start checking!
I think most of us are shocked on some level by Burberry’s practice of burning excess stock. Yes luxury brands thrive off the fact that not everyone wears them, and they have the right to choose where their clothes are sold, but it seems like such a wasteful practice when there’s a lot more the brand could do with their excess stock. And I think customers now expect that of them, particularly younger generations who are going to be the ones that Burberry will want to buy their clothes in the future. Environmental and sustainability concerns are growing in importance for customers and Burberry needs to position itself as being a positive force with regards to that or risk being bypassed by those future customers. New luxury is about more than labels. I’d really like to see them come up with some innovative use for excess stock in the future but I guess it’s a case of wait and see.
“New luxury is about more than labels.” Love that!
The furor about destroying the excess inventory of luxury goods seems ridiculous. Have we lost all common sense in the rush to endorse socially sensitive trends? No business wants to have excess inventory, but the business should have every right to eliminate it, to protect the exclusivity of the brand, in a way that is cost effective and efficient.
BTW, did Burberry say what they plan to do now that they won’t burn it?
Luxury retailers need to get their act together – watch out for competition like Alyned Together, a swimwear company which aims to “bring quality and luxury to all for less, while giving back to the environment.”
By admitting what they did, Burberry will receive scorn from lots of folks who love to pass judgement on others. It happens every day on social media and if I owned the company, this wouldn’t have happened in the first place.
I run an all-scratch gourmet deli, and nothing ever goes to waste. We control the production to limit the pull date, but if we screw up, it gets frozen right away, and given to our local food bank/soup kitchen every week. Burberry should recycle these to homeless shelters, overseas charities, or organizations that give these clothes to very poor families. Or better yet, they should reach out locally and have their employees drop off clothing to the local community shelters, which would bring excellent goodwill for the effort.
A kinder simpler solution will happen, and I applaud them for making a change in a positive way.
Creating scarcity is part of luxury — part of the business. How you create it is the sticking point here. Burberry would rather have sold the items than dispose of them, but it can’t let the unsold items go into the gray market. The more appropriate approach should be a combination of better stock management and bespoken production, and proper recycling of the materials into fillers or beddings or other sellable products.
It does seem wasteful, but I’m not really sure how much of a “furor” this “revelation” caused. Out here in Activist Central, where every cause known to man (and even a few that are just anticipatory) has found a lobbyist, I don’t recall this being a topic.
I’m cautious about having public opinion dictate or more precisely, micromanage the life cycle of a business. Isn’t the whole luxury segment, to a large extent, wasteful just by definition?