Burberry Burned £90m Of Goods So "Luxury" Buyers Could Feel Better About Themselves

Posted by Anne Wesley on

According to BBC, Burberry burned £90m of unsold clothes, accessories, and perfume over the last five years to protect its brand. Burning overstock goods, rather than recycling them, keeps them out of the hands of discounters, as well as saves the company in storage costs. In an oversimplification of economics, it's Burberry's solution to controlling their demand and supply curve. Unable to push demand by consumers further, by limiting supply in the open market, even if it's literally by purposefully burning goods into ashes, it pushes back the supply curve to where they can sell handbags for over $1k.

In more laymen terms, if consumers saw Burberry bags at TJ/TK Maxx or eBay for 60% off, then most consumers would stop seeing Burberry as a high-end luxury brand, especially compared to a company like Hermes were second-hand Birkin Bags still sell for at least $8-10K.

Nonetheless, this strategy has worked for Burberry, with average annual operating profits of £418m for the last five years. But while this may be an economically sound strategy, is it an ethically sound strategy.

From day one, Anne Wesley handcrafted items on a made-to-order basis because it minimizes fashion waste and, for us, a stand against fast fashion. If you're not aware, then fast fashion is fueling an environmental crisis. The clothing and textile industry is the second largest polluter in the world, following just behind oil. For a more comprehensive look, read this Newsweek Article by Alden Wicker.

While consumers would never identify Burberry as a "fast fashion" brand, its wastefulness and environment impact are no different. Additionally, if Burberry has so little hesitation to burn its unsold goods, then what actually makes them a luxury goods brand. I have yet to read that Hermes is burning Birkin and Kelly Handbags in order to manipulate supply. From my understanding, Hermes simply makes less than what the market demands.

I would argue that true luxury, at its pinnacle, is bespoke (made-to-order), regardless of the price or brand. What matters most is not only quality materials but also craftsmanship. While I believe most craftsmen would admit that most handcrafted items will never have the same finishing as factory made items, that is often what is most important. Knowing that an actual artisan, with all their skills and faults, made-to-order your item just for you.

While I don't know for sure, I would bet a pretty penny that Jeff Bezon, Bill Gates, and Warren Buffet are not wearing suits off the rack, but rather having them made-to-order to fit them properly.

My question to readers is this, especially those self-proclaimed brand loyalist, is "a luxury brand simply a company that spends millions of dollars in advertising, while also burning millions of dollars in unsold goods, in order to justify a high-end price. Or is luxury brand one that hand makes goods just for you, with premium materials, by passionate craftsmen, but without the brand name and premium price that goes along with it.

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