Burberry Follow Hermes By Destroying Unsold Stock.

In an article by The Times dated 19th of July 2018, a great deal was made of a move by Burberry to destroy old stock.  According to the article, announced at Burberry's AGM, the group has destroyed $37 Million worth of clothing.  The article pointed out this was equivalent to 20,000 trench coats.  The move raises several concerns, ethical ones being most significant.

As the headline of this article points out, this is not new.  Hermes have done this since the year dot.  If they produce a collection, and it doesn't sell, they put it to the on-sale room, and then destroy it if it also doesn't go at a discount.  Likewise, Louis Vuitton, if a piece is damaged, immediately send it to be destroyed, never considering for a moment the possibility of discounting.  The standout here, is they announced it, making the general public aware of a long time industry insider piece of knowledge.

The business rationale behind this is pretty simple, it combines the realities of luxury goods, and basic sales techniques.  First a luxury brand is very much like fiat currency.  While it's products are certainly better made than mass produced ones, with higher quality materials, the mark-up is entirely due to the willingness of consumers to pay it.  Therefore making sure the brand in questions goods remain perceived as worth paying for is essential.  Destroying it's goods achieves this by tapping into the underlying sense that "no-one else can have this".

Second a fundamental rule of sales is "create an urgency".  Consumers should be made to feel that if they miss out now, they miss out for ever.  Buy now, don't delay, is a common 1950's ad tag-line.  By destroying the goods unsold then announcing it, consumers see first hand that the piece that they like and passed on, is gone forever. Don't make that mistake next time!  These tactics create a throng beating down the door of luxury goods companies willing to pay whatever is asked.

Burberry are still shaking off the "chav" associations of the 1990's, and so by announcing this fairly common move, they are setting themselves for entry into the "desirable" club.

However, what of ethics?  Burberry explains they destroy the goods in a sustainable manner, thereby avoiding the environmental concerns.  The ethical question then is "why not give these clothes to the homeless domestically, and the impoverished in third world countries?"  There is no ethical answer.  If a luxury consumer sees a £1,200 trench on a homeless person, or on an aid video for third world peoples, and these persons received them for free, what motivates them to pay the price tag?