Up In Flames

It was a statement in the annual report of the British fashion label Burberry that sparked the outrage - the income statement showed that $35.6 million dollars worth of products were destroyed in the year. While this was commonplace in the fashion industry, it came out as a huge shocker to everybody else. The company proclaimed this is done so the products do not end up in the grey market; where items are sold at lower prices by other retailers unofficially, though it is legal.

The brand claims it disposes the items using a method that is eco-friendly, harnessing the energy from it during the process. It was an explanation that did little to douse the flames rising in the media.

Other fashion labels like H&M and Louis Vuitton, tech giants like Apple and Microsoft, luxury watchmaking company Richemont, which owns Cartier and Mont Blanc are guilty of this practice too. Apple got smacked with a lawsuit owing to its admission over slowing down older versions of iPhones - a strategy called planned obsolescence, in which a product is designed with a limited life. This is prevalent, especially in the F&B industry.

Luxury brands rely on product exclusivity to protect their business interests. The illusion of scarcity over exclusive products creates a sense of urgency. By making a product relatively difficult to acquire, companies take control of their business image.

What makes the brands so protective over their products? Brand crisis. Every brand has products that make it unique. In the age of the internet, it is easy to lose the originality of the product and the reputation of the company takes a hit. The outcome? Bad sales and a decline in trust. This is something no company is immune to. So we can almost forgive the luxury labels for being a little giddy when it comes to where their products end up.

Why is there a problem of excess stock in the first place?

Miscalculations in predicting what is to be produced are to be blamed. How the industry forecasts sales are in dire need of an overhaul. Previous year's sales figures dictate these predictions, and so are only an estimate of needs.

From a legal point of view, the companies are destroying genuine products which they own, products that are at the end of their shelf-life. So they have every right to do so. But there is a catch- is this the right practice to follow in a world with no adequate resources? And there is also the issue of protecting the environment.

It is incredibly difficult to find out how much dead stock goes to waste.  This destruction of goods is reflected in the financial accounts of the companies under an entry 'impairment of inventory', something which is not easy to comprehend. Unless they make remarkable changes in their production and sales strategies and the waste disposal methods, this discussion will continue to prevail.

-Shreya Kotagiri

(inspired by the article 'Burberry's report spotlights global fashion's burning issue' from The Hindu)