In 2017, Burberry destroyed £28.6m worth of unsold clothes, accessories and perfume. The reason? A desire to protect its brand.
To avoid any surplus stock being stolen or sold cheaply on the counterfeit market, the luxury fashion retailer has destroyed goods worth more than £90m over the past five years.
And the rate at which Burberry is destroying its designs is growing. The value of surplus stock sent to be burned has increased from £26.9m last year and £18.8m in 2016.
Burberry insists that it captures the energy generated from burning its products, making the process “environmentally friendly”. And it also claims it has “careful processes” in place to minimise the amount of excess stock it produces and is seeking ways to “reduce and revalue” its waste.
But if the luxury fashion house had nailed its marketing and design strategy in the first place there would likely be less surplus stock to destroy.
It is fair to say that Burberry is undergoing a period of transformation following the departure in February of its talismanic creative director Christopher Bailey, after 17 years with the company.
The luxury retailer’s latest results show a rise in revenue to £479m during the 13 weeks to 30 June, up from £478m the previous year. Sales in the UK and Europe, however, fell by “a low single-digit percentage rate”.
The fashion business blamed its performance on the falling number of Chinese tourists visiting the UK and Europe as currency fluctuations continue to bite following the Brexit vote. This is an important consideration as Chinese consumers currently account for 40% of Burberry’s sales.
The business is also overhauling its strategy for taking products to market. Under the helm of new chief creative officer Riccardo Tisci, the fashion house is moving away from releasing its full collection on a “see now buy now” basis, a model first introduced in 2016.
Only selected limited edition pieces will be available for immediate purchase from Tisci’s debut London Fashion Week show in September, with the full collection being released in February.
Taking a cue from the much-hyped streetwear market, Burberry wants to switch its strategy to making select pieces available in more frequent “instant drops”, in a bid to excite the consumer with “freshness”.
Rejecting the circular economy?
Aside from any business rationale, the ethical implications of destroying valuable merchandise are something a brand like Burberry is rightly being forced to address.
Yes, the luxury retailer has donated leftover leather to Elvis & Kresse, a firm that recycles leather to make new products, since 2017. But why does it actively chose not to recycle unsold garments or privately sell surplus stock to shareholders and donate the money to good causes if it is uncomfortable with its designs being discounted or appearing in the charity market?
The burning of product also calls into question how much value Burberry truly places on its designs.
While the retailer would argue that destroying surplus stock is a sign of just how much it values the long-term future of its brand, such a strategy grates against Burberry’s product storytelling. Consumers may question how much Burberry really cares about sourcing the softest cashmere if ultimately some of it will end up in an incinerator.
Furthermore, the repeated decision to destroy stock could come across as a rejection of the circular economy, a hot topic in the fashion industry at the moment.
Burberry previously talked up its commitment to cyclical economies, joining forces with Stella McCartney and Nike on the Make Fashion Circular initiative. The initiative seeks to promote a ‘zero waste’ vision by tackling textile waste in a bid to clean up the fashion industry.
Luxury retailer Stella McCartney also supports giving its clothes a second life through fashion resale. Released on Earth Day (22 April), ‘The Future of Fashion is Circular’ campaign rewards any shopper who sells a Stella McCartney item via the US fashion resale site The Real Real with a $100 voucher to shop directly with the fashion brand in one of its boutiques.
While Stella McCartney has chosen to take a different approach, it is fair to say Burberry is not the only company destroying surplus stock to prevent its products being heavily discounted or falling into the counterfeit market.
Fellow Make Fashion Circular signatory Nike was exposed by The New York Times last year for destroying stock by deliberately slashing its trainers to prevent them falling into the counterfeit market.
At the luxury end of the spectrum, Richemont has reported “destroying” £421m of watches from its portfolio of brands including Cartier and Jaeger-LeCoultre, and buying back stock across Europe and Asia.
While some watches will be stored and eventually redistributed, others are recycled for their jewels and movements. Writing in May, Marketing Week columnist Mark Ritson praised the Swiss luxury goods group for seeking to preserve its long-term brand equity by protecting the exclusivity of its brand among consumers and retailers alike.
Winning the PR war
While Burberry has its eyes firmly set on preserving its long-term intellectual property, in the short term its brand is taking a serious PR hit.
Lessons could, surprisingly, be learnt from the confectionery industry. When Hotel Chocolat found itself in an IP battle with Waitrose in May, the premium chocolatier was credited with winning the ‘chocolate war’ through a mixture of decisive action and a customer-first strategy.
After consumers flagged to Hotel Chocolat the existence of a Waitrose chocolate bar very similar in design to its chocolate slabs, brand co-founder Angus Thirlwell called for a chocolate ‘amnesty’. Anyone who had bought a £2 Waitrose bar was offered the chance to swap it for a £3.95 Hotel Chocolat version at no extra cost.
Rather than insisting that the “copycat” bars be destroyed, the amnesty continued until Waitrose had sold out of all its stock and an agreement was struck for the line to be discontinued.
Yes this is chocolate not luxury fashion retail, but surely there are lessons to be learnt about how to preserve your intellectual property in a way that does not involve enduring acute short-term brand damage to achieve perceived long-term gain.