Why Designer Brands Destroy Their Unsold Goods

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Written By Hossein Soltani

British high-end fashion brand Burberry has promised to stop burning unsold stock to be more environmentally responsible – but the firm is just one of many in the industry destroying clothes, shoes and accessories worth millions every year.

Burberry admitted incinerating unsold fashion items worth £28.6 million last year, but the fashion industry has a mountain of goods awaiting destruction.

Designers and brand managers claim they destroy unsold stock for the good of their business and shareholders.

They don’t want to see expensive, luxury designs flooding the market in discount stores.

This would take away the exclusivity and desire to own designer brands, bring down retail prices.

Instead, they want to promote scarcity and the top-end prices that comes with owning one of a few fashion items that denote wealth and style.

Protecting their brand

Fashion houses don’t see destroying stock as a waste, because besides protecting the brand, their accountants also file big claims for tax credits for every item that is thrown on the fire.

Environmental groups claim the destruction is irresponsible and harms the planet.

Setting aside the argument that producing fashion goods eats up energy and resources – like the furs and animal skins famous designers are quick to assimilate into their outfits – the waste and pollution from the flames are harmful, too.

“Modern luxury means being socially and environmentally responsible,” said Burberry Chief Executive Marco Gobbetti, but he is one of the few admitting this.

Compagnie Financière Richemont , the Swiss owners of watch and jewellery maker Cartier, has spent hundreds of millions of euros buying back unsold watches piling up at retailers because of a drop in demand from Chinese consumers.

Claiming tax relief

The company pried off the jewels and melted them down, but is recycling the precious materials.

Stefano Ricci executives see destroying unsold stock as a customer service.

“We do not like to sell our goods in discounted stores,” Niccolò Ricci said. “It’s giving respect to the clients and the workers.”

The company even films the incinerations to prove the tax man that the clothes have really gone up in smoke.

Some goes to charity, but Ricci explained the company could only claim a tax credit if the goods were destroyed.