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Self-destructive behaviour: Burberry not alone
PARIS, July 22, 2018 (BSS/AFP) – Burberry, which has been in the
crosshairs for burning tens of millions of dollars of its products, is far
from the only firm to destroy unsold goods to maintain the exclusivity and
luxury mystique of their brands.
In its annual report the British fashion firm acknowledged that it had
burned unsold clothes, accessories and perfume worth o28.6 million (32
million euros, $37 million).
More than a third of the products destroyed were perfumes, which the
company said was due to the rupture of its licence with US fragrances
manufacturer Coty.
Since Thursday, when that piece of information buried in its 200-page
report came to light, Burberry has come under scrutiny on social and news
media for the practice.
But industry experts say Burberry is far from alone.
“It is a widespread practice in the fashion industry, it’s commonplace,”
said Arnaud Cadart, a portfolio manager at Flornoy and Associates who has
previously followed the luxury industry as an analyst.
He said very few luxury brands hold sales to get rid of stock and instead
destroy unsold products. Fashion items with short cycles increases the amount
of leftover stock and items destroyed.
“Once you do some private sales to employees and journalists, it’s
dumping,” he said.
Burberry said Thursday it had measures in place to minimise its amount of
excess stock, that it takes its environmental obligations seriously and
harnesses the energy from burning the items.
“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,” the firm said.
The destruction of goods is reflected in financial accounts, but in a
manner “difficult to comprehend, often under an entry ‘impairment of
inventories'”, said Cadart.
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French luxury giant LVMH said in its latest annual report that “provisions
for impairment of inventories are … generally required because of product
obsolescence (end of season or collection, expiration date approaching, etc.)
or lack of sales prospects.”
Hermes’ annual report also spoke of product “obsolescence (notably finished
seasons or collections)”.
Clear indications of the amount of products destroyed were not provided.
– ‘Not socially responsible’ –
“It’s clear this isn’t going well” in terms of public opinion “because this
isn’t a ‘green’ practice and perhaps not socially responsible as there are
people who don’t have clothes to put on their backs,” said Cadart.
“Yes, there is a moral, ethical question as well as protecting the
environment,” said Boriana Guimberteau, a specialist on intellectual property
law at the FTPA law firm.
“But from a legal point of view, the brands are destroying genuine products
which they own, products that are at the end of their life or the season, and
they can do what what they want” with them, she said.
Guimberteau said a tenet of maintaining brand image is that exclusive
products should be sold in exclusive distribution networks and that markets
shouldn’t be flooded with end of season products.
The manufacturers association Unifab, which defends intellectual property
rights and combats counterfeiting, said there are different reasons firms
destroy their unsold goods.
These can include a desire to ensure they don’t enter other sales channels,
while products such as perfumes and cosmetics have sell-by dates after which
firms destroy them to ensure consumer safety.
Firms also destroy unsold goods “to protect its intellectual property,
which is an asset,” said Delphine Sarfati-Sobreira, Unifab’s general
director.
She deplored the witch hunt against Burberry, saying that a “firm which
destroys its products will certainly produce others, thus giving work to some
of its staff”.
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