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Burberry after its Burning Ban

12/28/2019

14 Comments

 
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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

Did you give or receive clothing this holiday season?  You may not know that if that sweater, jacket, or hat hadn’t been purchased, it might have been burned.  In an age of increased environmental consciousness and frequent corporate cutbacks how can companies tolerate such waste?  It has to do with building brands.
 
In 2017, the upscale British fashion label Burberry destroyed over $38 million worth of its own clothing, perfume, and accessories.   BBC News says that over a five-year period, the brand scrapped products worth a total of about $121 million.  Fortunately, Burberry announced last year that it would stop the ‘self-destructive’ behavior; although, it hasn’t said how it will handle the excess product.  Unfortunately, Burberry isn’t the only brand known for trashing its own inventory.
 
According to Vox, other participants in the practice include luxury labels like Louis Vuitton, Michael Kors, and Cartier.  However, even basic brands such as Eddie Bauer, Nike, and H & M, have been cited for incinerating unsold merchandise.
 
Why would any company destroy products it spent valuable time and resources making?  Motives may vary for such a seemingly inexplicable practice, , but the main reason seems to be that high-end fashion brands, especially, need to preserve perceptions of exclusivity.

Some manufacturers, e.g., makers of snack foods and soft drinks, would like as much of their products sold as widely as possible.  Certain other brands, however, seek to create an air of exclusivity in one of three main ways, either by not making the products available: 1) all the time, or 2) everywhere, or 3) for everyone.
 
For instance, although McDonald’s Shamrock Shake is available all over at a price that most people can afford, the ice cream is only sold for a limited number of weeks each year.  Notwithstanding ever-increasing ticket prices, Disney positions its theme parks as entertainment for a very wide range of people, year-round, but it maintains ‘the magic’ by limiting the number of locations to just a few around the entire world. 
 
Upscale fashion brands like Burberry, in contrast, place no real time restrictions on purchase of their products.  Likewise, although they’re not as ubiquitous as MacDonald’s restaurants, these fashion retailers tend to have a decent number of brick-and-mortar locations.  Burberry has about 50 stores in the continental U.S. in addition to its easily-available online storefront.
 
The main difference is that Burberry and similar luxury fashion brands aim for exclusivity by positioning their lines as prestige products sold at premium prices.  For instance, a search for “all bags” on Burberry’s website returns a low price of $490 for a “Grainy Leather Card Case with Detachable Strap” to a high price of $2,750 for a “Medium Quilted Monogram Lambskin TB Bag.”
 
Of course, price alone excludes most people, who can’t afford to spend hundreds or thousands of dollars on a handbag, from buying Burberry; however, other positioning of the products also adds to their exclusive appeal: They’re not the purses we see shoppers carrying into the average supermarket.
 
‘Mousingover’ specific products on its website, reveals images of the kinds of people Burberry envisions owning its bags: ultra- stylish, impeccably-attired, young, affluent, runway-model types.  That description probably doesn’t apply to most people reading this blog, nor does it apply to the person writing it, but Burberry doesn’t mind.


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While MacDonald’s considers it a win if hundreds of millions of people eat its hamburgers, and Disney is delighted to have an even wider variety of people visit its theme parks, Burberry and other luxury labels don’t covet consumption of their products by the masses.  Their brands’ allure is based largely on limiting availability to the relatively few people who can afford their products and who live the more lavish lifestyles associated with their use.
 
If somehow ‘average people’ began buying Burberry’s bags, the brand’s true target market would be turned off.  Though its loyal customers may not articulate it, one reason they like Burberry is because very few people own the brand.  Burberry banks on feelings of exclusivity, allowing its users to assert, "I own something that not everyone else has."
 
That brings us back to the issue of over-supply and what companies like Burberry should do when they’ve made too many handbags, hats, etc.  In the past, Burberry has justified burning excess inventory, saying that it captured the energy from the burning, making the annihilation environmentally-friendly.
 
Unfortunately, though, “the energy that is recouped from burning clothing doesn’t come anywhere near the energy that was used to create the garment.”  In addition, burning garments that contain polyester, which comprises about 60 percent of the fiber market, means the release into the air of harmful CO2, as well as chemicals often present in clothes.
 
Other ways firms have attempted to destroy unwanted products have included shredding and landfilling.  Of course, these methods carry their own negative environmental impacts and fail to qualify as sustainable solutions.
 
Some may wonder why excess clothing can’t be recycled or donated.  Mixed fiber cloth, from which many woven clothes are now made, makes recycling especially challenging, as do buttons and zippers, whose removal is very labor-intensive.
 
Others may ask “Why can’t surplus clothing simply be donated or sold at a discount?”  For many companies, such product disposition ‘makes cents’ (pun intended), but not for high-end fashion labels.  These brands can afford to take a hit on their enormous markups, but as mentioned above, they can’t accept dilution of their brands’ images, which occurs if their products fall into the hands of the less-than-modish masses.
 
So, what can fix this problem that pits environmental stewardship against brand equity?  Unfortunately, there doesn’t appear to be a clear solution.  In a 2018 interview with Vox, Timo Rissanen, an associate dean at Parsons School of Design and a professor of fashion design and sustainability at the school’s Tishman Environment and Design Center, provided a thorough analysis of firms’ destruction of excess product, but in the end, the best solutions he offered were for consumers to avoid impulse-buying and to instead purchase secondhand products.
 
Those are valid recommendations for you and me, but unfortunately they don’t really address prevention of the problem, i.e., what companies can and should do.  I’m no fashion expert, and the following thoughts are admittedly undeveloped, but I’ll offer two possible ways to decrease the production of excess goods:
  1. Implement quick response processes:  Fashion lead-times are often three months or more, making it challenging to match supply and demand.  Spanish retailer Zara, however, has developed ultra-responsive production processes that allow it to move from product conception to consumer within a few weeks.  If more brands would ‘follow suit’ (pun again intended), it might help to close the gap between what’s made and what consumers want to buy.
  2. Use artificial intelligence:  Firms have employed data-based demand forecasting for decades, but even more accurate prediction is now possible through artificial intelligence in which machines learn from past experience and use algorithms to very accurately estimate future consumption.  Such technology holds great promise for synchronizing supply and demand. 
 
Burberry’s decision of over a year ago to stop burning its unsold clothes was certainly laudable and might be considered Mindful Marketing if the company were to implement some of the strategies mentioned above or take other consequential action.  However, in the absence of a clearly conceived and communicated plan for managing excess inventory, Burberry’s announcement now seems like “Simple-Minded Marketing.”


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14 Comments
Ryan Feenstra
1/9/2020 07:53:44 pm

Burberry made a simple-minded decision to please the public. After ceasing the burning of excess clothes for years, they decided that it would be most beneficial to the public if they were to halt that strategy. It is obviously more beneficial to Burberry to continue to burn because the desire for that specific product would be much higher than a product that more people are able to obtain. Although this may seem like a "mindful" marketing decision, it does not benefit Burberry directly. I do agree with it being a "simple-minded" decision. The reason being that their decision was much more appealing to the public as it was to their stakeholder value. Their decision to ultimately ending burning of their own product will eventually be beneficial towards their company because of the societal impact the ban will have. More people will hear about Burberry because of their environmental decision to stop burning, which in turn, will have more people supporting the company and purchasing their product.
Personally, I would never buy a Burberry product because I am not interested in their products, however, after hearing the news about the ban on burning their product it gives me a positive view over their organization. By gaining a positive view of their company they will certainly gain more customer’s and while not burning the product will create more revenue. Ethically, their decision to ban burning their products was a great decision. The impact on the environment after the ban will be very beneficial and they will be known for making the correct choice.

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Tanner Stern
1/10/2020 09:55:33 pm

The fashion industry has faced a lot of scrutiny, especially recently, for many of its behaviors. Burning of excess merchandise is only one of a handful of the industry’s “bad behaviors” that come to mind. The fashion world still idolizes what most doctors would call unhealthily slim figures. This has had a negative effect on many consumers, particularly women, who struggle with their body image and worry that they do not meet expectations, unrealistic as they are. Another concern I can think of are the "Nike sweatshops" and other production practices that prioritize profits over worker health and safety.

These blunders, involving multiple major players in the fashion industry, are making it [more and more] necessary for fashion firms to shift public perception of their brands towards the positive. Continued failings to cater to ethical sensitivities, including environmental and social concerns, will not be acceptable to ever more conscious consumers. Burberry would do themselves a favor by taking a step toward corporate transparency, implementing one of the methods for decreasing waste discussed in the blog post, and communicating to their customers their approach.
The fashion industry has faced a lot of scrutiny, especially recently, for many of its behaviors. Burning of excess merchandise is only one of a handful of things that come to mind. The fashion world still idolizes what most doctors would call "unhealthily thin" figures. This has had a negative effect on many consumers, particularly women, who struggle with their body image and worry that they do not meet what are unrealistic expectations. Another I can think of are concerns about "Nike sweatshops" and other production practices that prioritize profits over worker health and safety.

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Nathan Clark
1/12/2020 03:26:20 pm

It is easy to understand why Burberry decided to burn their unsold products because they are trying to preserve their target market's desire to be "exclusive". If you are trying to create the image that only certain maybe "elite" group of people can afford your products. Fashion products often come under scrutiny with the assumed Nike sweatshops or the using of certain animal skins or furs to create luxury apparel. Burberry has started to sell some of their lower end products to organizations like Ross or Burlington who sell Burberry cologne and sometimes tie clips. This seems like a better strategy than burning excess product because their is still profit being made by being able to sell them off. It is obviously a good environmental and image decision to stop burning their unsold item.

I own a bottle of Burberry cologne that I got at a Burlington and it's a nice product but buying their apparel consistently is too much for my budget. To keep a positive image they will have to become more transparent since customers today are more involved with corporate activity than in the past. As much as Burberry can distance themselves from being known as the company that burns products is better for them.

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Karis Owens
1/12/2020 07:38:41 pm

The fashion industry has brought up many ethical concerns in attempts to appease its consumers. There is an evident cycle that is fueled by this business and consumer codependent relationship. Big companies depend on customers to purchase their product, while the customer depends on the companies to provide them with the products they desire. Burberry is no exception to this consumerist problem, which pushes them to do what is necessary. Many brands like to market themselves as exclusive, to create an illusion of higher status. It has become a symbol of success within society. Owning certain products says something about you before you even speak. Specific brands, like Burberry, have worked hard to build themselves to be one of those symbols.
In this case, Burberry and brands alike are burning their products to uphold this idea. They’ve been ignoring obvious ethical issues, causing environmental issues and promoting wasteful actions in order to keep up with their image. Fortunately, there have been concerned consumers speaking against these practices, and as a result, Burberry has agreed to stop burning its products to appease consumers. It became bad for business, therefore the company had to alter its practices accordingly even though they risk losing their elite reputation. This reaction shows the lengths that a company would go in order to market themselves to the public and stay relevant and remain a desirable brand.

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Bryce Doane
1/12/2020 08:50:42 pm

To me, I find it extremely surprising that anyone, no matter what the reason, thought the best thing they could do to unsold supply was to burn it. I see that decision on the matrix as completely mindless. Not only is it not upholding ethics and societal values, but it is in a way destroying market value by wasting perfectly good supplies (not to mention the negative publicity once it was found out about). I am not a very devout follower of the fashion industry so in my opinion, the best solution would be to cut the label off of the good to "rebrand" it in a way and donate or sell it for cheaper. As for the solutions proposed in this article, I find them both to be possible but I can't see one of them specifically happening in real life. One would assume (or hope) that this extra inventory is a sign of their lack of ability to predict supply and demand so the machine learning may not work. I see the quick response time to be the best solution. If consumers are willing to pay thousands on an article of clothing or accessory, it is probably a safe bet that they would be willing to wait a few weeks to get it. Add the marketing of "made just for you" onto that and I see it as only building the brand. Hopefully the new trend of not supporting unethical companies will be very effective at changing strategies for both Burberry and any other company that may use these practices.

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David Brezina
1/12/2020 10:35:16 pm

Why are thee clothes not being donated to a third world country? I get that they want to make their product very exclusive but I do not think that if they donate their clothes to a third world country they wound be compromising that. If the clothes that were burned were given to a country such as Sudan, Ethiopia, Nepal or any other place with a low level income community not in their country. This keeps the exclusivity in their own playing field, leads to less pollution, and benefits those in need. This would also move it to mindful marketing.

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Clay Dimpsey
1/13/2020 12:20:05 pm

It makes sense to me for Burberry to burn their unused products. It helps solidify the brand's sense of exclusivity and protects the feelings of opulence that Burberry's consumers experience. From a legal standpoint, it is not illegal to burn clothing. Ethically speaking, It may be seen as wasteful or harmful to burn these items but really the environmental effects are rather minute considering their limited inventory.
I like the idea of investing in AI to help predict sales volumes. This would definitely help the company to only produce what it will sell, which in turn will help it to be a more profitable company. This could be marketed as a move towards being a more environmentally conscious company, which would give it an appeal over other similar brands.

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Sara Parrish
2/26/2020 10:35:51 pm

It seems impulsive for Burberry to "protect" their brand by destroying old inventory. The idea of protecting the brand culture itself is not wrong. They create luxury products for like people and allowing old inventory to exist for extended periods of time would mean the items get continually discounted. This would invite the expansion of the brand's target market to middle class/ lower income people. These people would only invest in clearance items which would be a sale. However if Burberry had a retail store or sold in a retail store the numbers regarding units per transaction would start declining.

There is a chance that instead of destroying old items they could recycle them. Using fabrics from old patterns to make limited addition items. This would could also help increase sales especially if the print was popular when first put out. They could always donate the items places such as higher end thrift shops which other companies do. Or sell the items to places such as Ross.This would increase sales as there would be a transaction taking place.

Despite their decision I agree that destroying their own product to remain inclusive was rather simple minded.

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Andrew Thomsic
3/21/2020 06:19:18 am

It is totally understandable that Burberry would rather trash all of their Old products instead of giving it away. Some people might not like the idea of Burberry putting their prices on Products. It is too expensive and people do not like it that idea. But I like it, it is because for me it shows that when people can afford such luxury brand shows me that they worked hard. I like the idea how Burberry warning everyone who owns their brand be different from everybody else in the sense of materialistic status. Nothing that materialistic status is good, being different can be good. Wearing such luxury brand reflects the hard work they put in. Some people also use that hard work to flex off, but that is their choice. I do not think Burberry and other luxury brand is trying to create a group of people that only rich people can afford. It is society putting the group of rich people together and society is giving power to those rich people and making them feel more important than others. Society can view it as hard work or viewing them more important than themselves.

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Sam S
3/22/2020 04:26:16 pm

I never thought about the issue of the psychological effect on the product, but it does make sense why people might be offended with the product. I agree with the five levels of Maslow’s hierarchy, giving firms a better understanding and point of view on how to respond to customers. As for peloton’s ad, they offer the right product but giving people the wrong interpretation.

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shuang Qiu
3/22/2020 05:17:49 pm

Thank you for sharing the interesting blog about Burberry. This blog leads me to think. Well, I never thought of these problems encountered by luxury brands before. I know there are only certain group of people can afford buying Burberry's products. However, I never though they had to burn their unsold products. I strongly believe that is not a way to solve the problem, but increase environmental problem, which is more difficult to solve. However, I am happy they stoped burning. For the problem luxury brands are facing right now, I would like to give some suggestions:
1. Limit consumer's purchases per month.
2. Limit to produce their products.
3. discount for customers reaching into a certain level.
I think these kinds of suggestions can help them to sell their products, but not to everyone. In other words, discount is only for rich people. That can help to keep luxury stores's purpose letting rich people feel special.

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Somy C
3/23/2020 06:05:00 pm

I have heard of this problem before with many other fashion brands and I was surprised by how far they would take their excess, unsold products just to uphold their luxury title that is not accessible to everyone. A suggestion that can be done to stop overproducing is limiting their products. Since luxury brands are all about exclusivity, they should produce less than they usually do, that way their money is not wasted on overproduction and can be spent on creating new products. Though this may not be an ideal solution, it should be considered; it is a better opinion than burning clothes and emitting harmful gas to the environment.

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Emma Lytle
5/4/2020 09:52:54 pm

This was crazy to read about. I have not heard of companies taking it to the extreme like burning their own products before. I think that its good that they aren't going to burn unsold products anymore and I agree that this is simple- minded marketing. I can see that they do not want to just give their products away because they would loss value when trying to sell them.

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Cole Kellison
5/5/2020 09:34:58 am

I cannot believe that companies would rather burn and incinerate their products than try to sell them at a reduced price. Selling them at a reduced price would at least salvage some of the money and time that were put into the product. This is a giant waste of resources, time, money, and many other things that go into making and selling a product. There are many other ways to deal with products that have not sold, like giving them to charities to distribute to those who cannot afford new/ nice clothing. This article is disheartening at points.

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