Burning Burberry

This is interesting from an economics point of view:

Burberry, the upmarket British fashion label, destroyed unsold clothes, accessories and perfume worth £28.6m last year to protect its brand.

It takes the total value of goods it has destroyed over the past five years to more than £90m.

Fashion firms including Burberry destroy unwanted items to prevent them being stolen or sold cheaply.

Someone has obviously done some calculations and estimated the damage done to the brand’s image by selling their products at a discount is greater than £90m. So, it’s cheaper to burn it.

Burberry is not the only company having to deal with a surplus of luxury stock.

Richemont, which owns the Cartier and Montblanc brands, has had to buy back €480m (£430m) worth of watches over the last two years.

Analysts say some parts of those watches would be recycled – but much would be thrown away.

Better than being flogged second hand on eBay, obviously. Naturally:

Environmental campaigners are angry about the waste.

Those last three words feel superfluous.

“Despite their high prices, Burberry shows no respect for their own products and the hard work and natural resources that are used to made them,” said Lu Yen Roloff of Greenpeace.

You can imagine the mental gymnastics they went through trying to put their knee-jerk objections into vaguely-coherent words, can’t you?

“The growing amount of overstock points to overproduction, and instead of slowing down their production, they incinerate perfectly good clothes and products.

Are they still producing the same line of clothes they’re burning? Unlikely. And since Lu Yen Roloff brought up thrift:

Maybe we can get Burberry employees and shareholders to comment on her lifestyle?

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9 thoughts on “Burning Burberry

  1. That £90m will be the full retail value, not the cost of production.

    For a luxury brand, the factory gate price will be less than a tenth of the retail price. For example when Burberry closed their factory in Treorchy, the GMB argued that they could easily afford to remain in the UK. Yes, the GMB conceded, manufacturing a t-shirt in China is cheaper (£4) than in Wales (£11); but it’s a moot point when the retail price is £55.

    By comparison, an iPhone X retailing at $999 costs $370 in parts alone.

  2. Burberry got burned when the chavs started wearing their stuff and the value of the brand was significantly devalued (certainly by a lot more than $90 million I would have thought), so they have learned that lesson and the net result is that they destroy excess stock rather than let it go to places like TKMaxx or market stalls.

    The right decision I think, although next time around better to transfer excess stock to “storage” and then have a few trusted employees destroy it behind closed doors.

  3. Sun Microsystems, after the dotcom boom went bust, bought a load of their own kit back from the busted companies. The plan was to keep their price points for new kit rather than everyone buying up the second hand kit.

    Didn’t help much in the end anyway.

  4. Burberry got burned when the chavs started wearing their stuff

    Yes, for a while it was the uniform of choice for football hooligans. Perhaps not the market the branding people intended to capture?

  5. Sun Microsystems, after the dotcom boom went bust, bought a load of their own kit back from the busted companies.

    When the oil price crashed, the big drilling companies sent their idle rigs to be chopped up and scrapped rather than selling them and risk them turning up in low-cost competitors’ hands in future.

  6. Don’t Rolls Royce buy up old vehicles so you don’t see them falling apart in gardens etc.They also pick up broken down vehicles in a covered lorry so you don’t see them being towed.
    Most of the vulgar colours go to oil states anyway.

  7. Lu Yen’s Instagram feed is an eye-opener. With the amount of international travel she does – always to nice places. Why do all her meetings seem to take place in Beach Resorts & Spas? – her carbon footprint must be bigger than that of a medium sized African country. But, of course, she’s ‘doing good’.

  8. Tim,

    This is rather sad.

    I can sort-of understand Burberry destroying surplus clothing. As others have pointed out, they don’t want to sell it cheap and for it to end up in the wrong hands (on the wrong bodies?), so to speak. But holding it back and releasing slowly onto the market probably isn’t viable either, because after a while it will no longer be fashionable. Besides, clothes are fairly bulky and storing them will likely be expensive.

    But I cannot understand why Cartier is destroying surplus watches. The technology and style of mechanical watches hardly ever change, while watches are small and easy to store.

    And your comment that the oil companies to this too is interesting, destroying surplus rigs to keep them out of the hands of low-cost competitors.

    I absolutely hate seeing anything go to waste. But after reading this, perhaps I shouldn’t feel so guilty about replacing a perfectly good, albeit obsolete, flip phone with a smartphone.

  9. And your comment that the oil companies to this too is interesting, destroying surplus rigs to keep them out of the hands of low-cost competitors.

    They belonged to drilling companies, not oil companies. But yeah, some that went to the gas-axe were real, state-of-the-art rigs only a few years old which were too costly to go into storage.

    I absolutely hate seeing anything go to waste.

    Me too, but stuff is so cheap and easy to make now it’s not half the tragedy it used to be. There really isn’t anybody in the world now that isn’t properly clothed.

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