Burberry is a luxury fashion line based out of London, England valued at $12.5 billion. They have everything from outerwear, to accessories and cosmetics.
Last year the company decided to burn about $3.78 million worth of unsold, unwanted products. Not only was this shocking to consumers, but Burberry shareholders as well. This not only seems wasteful, but poses a great environmental concern.
Just to put it into perspective; $3.78 million worth of Burberry product is equal to about 20,000 of their luxurious and expensive trench coats. It seems greatly wasteful to the general public of course, but imagine what 20,000 burned coats can do to the environment. Just in the last five years, they have wasted over $116 million worth of unsold product. Their waste value has increased by 50% in the last two years alone, six times its 2013 waste amount.
But, maybe this practice is not too uncommon afterall. The Times reports that “Designer brands often destroy unwanted stock to stop it from being sold at discounted prices and maintain the exclusivity of their products so they are not sold to the ‘wrong people’”. This does not necessarily bring smiles to those who love shopping at retailers like Ross and Burlington, for example, who sells expensive brands at discounted prices.
The Burberry brand is rather expensive, but that does not stop people from buying their products. Some Burberry trench coats sell for $1,800 and some polo shirts can sell up to $250. In their annual report, they said they destroyed $13.76 million in their beauty products, and $24 million in ready-to-wear products and accessories. Yes, this does include their trademarked trench coats.
Shareholders are now complaining about the destruction. Retail Gazette reports that one investor asked at general annual meeting why the products were not being made available. Investors are especially concerned since growth slowed in its first quarter. Retail Gazette also reports “One investor questioned why shareholders were not asked if they wanted to purchase good at its AGM”.
Retailers say that this practice helps stop the counterfeiting of products. Outgoing chairman John Peace says destroying stock is “not something we do lightly”. Burberry operates several licenses in many markets, therefore they do not have complete control over their production. This means that some factories can actually tamper with specific design copyright and release “subpar quality items” (Retail Gazette). So to counter potential negative effects, the Burberry line often destroys or buys back their collections. However, destroying unused products can help brands that import into the US benefit from a return on some taxes.
Burberry claims the burning of products in an industry wide practice. Brands like Chanel and Louis Vuitton also burn their unsold stock.
In a Newsweek statement, Burberry says “On the occasions when disposal of products is necessary, we do so in a responsible manner, and we continue to seek ways to reduce and revalue our waste”.
So the moral to the story is, “get it while the getting is good”.
