Here's Why Brands Like Burberry Burn Excess Inventory And How They Could Stop

The British luxury fashion house is doing away with the practice, but you'd be surprised at how many labels do the same.

Burberry announced Thursday that it would stop the practice of burning unsold merchandise, effective immediately.

The decision comes less than two months after the media noted that the luxury label had burned around $37 million worth of clothes, accessories and perfume in 2017 to “protect its brand” ― a practice that’s common with high-end labels trying to maintain the allure of exclusivity.

Burberry said in a press release that its new commitment “builds on the goals that we set last year as part of our five-year responsibility agenda and is supported by our new strategy, which is helping tackle the causes of waste. We already reuse, repair, donate or recycle unsaleable products and we will continue to expand these efforts.”

Other luxury brands like Chanel and Louis Vuitton have also burned excess merchandise, as HuffPost earlier reported.

The practice of destroying unsold goods is “more common than consumers realize,” said Margaret Bishop, a professor at Parsons School of Design at The New School and at The Fashion Institute of Technology. She noted that many brands ― not just luxury labels ― do it.

There are a couple of reasons why.

Especially in the luxury realm, it’s about keeping the brand intact.

As Bishop explained, no matter what price point the clothes sell at, the company has likely invested a lot of money and resources into building and maintaining the value of that brand.

At the luxury level, “some brands feel that they don’t want their product to be seen, photographed, etc. on a group of people who might not be able to actually afford that brand,” Bishop said. “So, if they have excess stock, they may choose to destroy it rather than it going into an off-price outlet or being sold at a discount price or being in some other way moved into the [lower-price] marketplace.”

“That, as you can imagine, can be very controversial,” she added.

The location of the excess stock may also be a factor.

There’s another, perhaps more surprising reason why some brands may choose to destroy inventory ― because it’s cheaper than sending it to be sold in other countries.

For instance, Bishop said, trade regulations can make it “more expensive for the company to ship [excess merchandise] to another country for legitimate distribution than to simply destroy it.” If a brand made or warehoused its products somewhere in the European Union, and it had more product than the EU marketplace could absorb, import duties can actually make it cost-prohibitive to ship those goods outside the EU, according to Bishop.

What are the obvious alternatives?

Two no-brainer ways to get rid of excess clothing are to recycle or donate it, which some brands do. In Burberry’s statement on Thursday, the label said it already does both and plans to “continue to expand these efforts.”

Kotn, a Canadian company that produces affordable high-quality basics, also told HuffPost that it donates excess inventory to people who can use the goods, as opposed to destroying them.

A spokesperson for Gap Inc. said the company’s overstock is either sold through its National Recovery Center in Kentucky or donated to local nonprofits, as long as the products meet the brand’s safety testing standards.

“We know there’s more work to be done, but we’re committed to doing our part to responsibly reduce our environmental footprint and find ways to give back to the communities where we live and work,” Gap’s spokesperson said.

Brands could also look at the bigger picture.

If companies really want to cut down on their excess inventory (and in turn, their waste), Bishop proposes another route.

“As somebody who, for my entire career, has worked with supply chains, I think brands need to go back to their initial line planning and make some decisions about not producing so much,” she said. “Clearly if they have a lot of excess stock, there’s something wrong with their initial planning.”

Brands may lose some sales opportunities if they don’t carry as much product, Bishop acknowledged, but they also lose money by destroying goods they produced and distributed.

“Reducing the amount of excess stock they produce in the first place helps offset any lost revenue from not having enough stock,” Bishop said.

Selling fewer items can even help maintain the label’s exclusivity. If a brand puts a clearly limited number of items on sale ― think of streetwear brand Supreme’s business model, for instance ― those items will seem all the more special.

“If you don’t have as much stock and your customers miss out, that actually prompts them to get to the store a little fast or go online a little bit faster and make that purchase more quickly,” Bishop said, noting that the fear of not being able to get something can generate a sense of urgency.

However brands handle the problem of too much product, Bishop hopes Burberry’s decision will influence others, both luxury and affordable, to stop the burning.

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