Last week, Burberry’s annual report revealed £28.6 million ($38 million) worth of stock was sent to be incinerated last year. The news has left investors and consumers outraged but comes as little surprise to those in the fashion industry.
The practice of destroying unsold stock, and even rolls of unused fabric, is commonplace for luxury labels. Becoming too widely available at a cheaper price through discount stores discourages full-price sales and sending products for recycling leaves them vulnerable to being stolen and sold on the black market. Jasmine Bina, CEO of brand strategy agency Concept Bureau explains, "Typically, luxury brands rally around exclusivity to protect their business interests - namely IP and preservation of brand equity." She stated she has heard rumors of stock burning but not specific cases until this week. Burberry does engage in a limited amount of cut-price selling through 54 outlet stores worldwide in comparison to their 449 directly operated full-price stores.
Another reason for the commonplace practice is a financial incentive for brands exporting goods to America. U.S. Customs and Border Protection states that “if imported merchandise is unused and exported or destroyed under Customs supervision, 99% of the duties, taxes or fees paid on the merchandise by reason of importation may be recovered as drawback.”
It is incredibly difficult to calculate how much deadstock currently goes to waste as while there are incentives to do it, there’s no legal obligation to report it. As such, most of it remains hearsay.
A source, who chose to remain anonymous, shared her experience working in a Burberry showroom in New York in October 2016. “My job, with many other people, was to toss every single piece in boxes from hundreds of racks so they can send it to burn the unsold collections. It was killing me inside because, as a vegan, seeing all that leather and fur went to waste and these animals had to die for nothing. I couldn’t stay there any longer, their business practices threw me off the roof.” In May this year, Burberry announced it was taking fur out of its catwalk shows and reviewing its use elsewhere in the business. “Even though we asked the management, they refused to give us detailed answers why on earth would they do this to their collection,” the source, who left the role within two weeks, continued. She has since worked with another high-profile, luxury label that she was horrified to discover shreds dead stock over recycling it but declined to name them for concern of being identified.
Read more here
