Burberry’s store in Oslo, Norway. Image credits: Wikimedia Commons
In 2018, Burberry disclosed in its annual report that it had physically destroyed £28.6 million worth of unsold clothing, perfume, and accessories over the previous financial year, a routine practice in luxury retail that became a public controversy as soon as the figure came to light. The disclosure, buried in a lengthy annual filing, drew immediate scrutiny from the media, shareholders and lawmakers, and the company announced in September 2018 that it would stop destroying unsold merchandise except as a last resort. Burberry’s annual report stated that the cost of finished goods physically destroyed that year came to £28.6 million, a figure later cited directly in a UK House of Commons Environmental Audit Committee report examining sustainability across the fashion industry. This was an increase from £26.9 million in the previous year, according to Burberry’s 2017/18 annual report. The Fixing Fashion report itself cites data showing only 55% of the 150 brands and retailers surveyed by Fashion Revolution’s 2018 Transparency Index were publishing measurable, time-bound environmental goals, with just 6% offering repair services. A recommendation made by the Environmental Audit Committee in their Fixing Fashion report of February 2019 suggested that the British government should stop the practice of burning and burying unsold stocks of clothes that can be recycled and reused.
Because counterfeit products may benefit from discounted goods for legitimacy, by selling the surplus goods at a discount, Burberry said that it could diminish the value of its brand as well as create an opportunity for counterfeiters,. This, as stated by the company, helped them capture the energy that was released during the process.
The new policy was designed to prevent any surplus from entering the grey market, according to Burberry. The Fixing Fashion report said that “the fashion industry has marked its own homework for too long” and called for stronger government action, including mandatory due diligence and measures to make retailers take greater responsibility for textile waste. Among the products destroyed were clothes, accessories and perfume that had not been sold through regular distribution channels. The company chose to burn off the products instead of selling them at a reduced price or donating them away. The grey market is characterized by discount items that may erode a brand’s premium positioning. The justification provided by Burberry was not uncommon within the fashion retail industry. The committee noted that the Burberry stock-burning case had drawn attention to wider concerns about how fashion companies handled unsold goods. Advocacy groups added to the pressure. The parliamentary committee’s findings highlighted the wider problem of unsold stock and called for stronger government action on textile waste. The recommendations did not become laws, but the findings of the committee were largely based on the attention that was garnered by Burberry’s disclosure and it was used as an exemplary case where voluntary commitments alone were perceived as insufficient. It was hard to tell whether other British firms were disposing of as many items as Burberry, yet most companies give very little information on the issue as compared to Burberry in their annual reports.
