[Closed] Burberry Burns £28,000,000 Worth of Stock

I did like how they said later in the article how they recovered the energy when it got burned so it was environmentally friendly. Yeah, right!

Mind you £28m of retail stock - so about a £2m to manufacture and about £300,000 of materials.

Is this not a bit ridiculous in this so-called environmentally friendly day and age?  I understand the overstock problems… it’s the waste I can’t fathom.

Cheaper for them to do it, yep it's wasteful but their brand is screwed if it ends up being something the chavs can get in TK max

tax dodge ?

offset the RRP of your unsold tat against your annual profits, for a small percentage loss in actual production costs - or doesn't it work like that ?

Well there could be an offset, but selling stuff real cheap devalues the brand too much. You only pay what you pay because it's exclusive.

A lot was perfume to so not like a massive bonfire will loads of chavvie jackets, caps and bags on it. Mind you can you even set fire to perfume or do you need to extract most of the water first? Also what does gallons of burning perfume smell like...?

Cheaper for them to do it, yep it’s wasteful but their brand is screwed if it ends up being something the chavs can get in TK max

That happened years ago.

think perfume is mostly alcohol rather than water and would burn quite well 🙂

The misleading part is that they burned £28,000,000 worthy of stock because they obviously didn't.

It's only worth something when someone buys it at that price.

Mind you £28m of retail stock – so about a £2m to manufacture and about £300,000 of materials.

I can't even see perfume coming to that... it's just some alcohol and a few chemicals.

That happened years ago.

It did. And they nearly lost the brand as something of value. Somehow they managed to weather the chav storm and I guess they are now very protective of it. It's one thing some market stall selling knock off Burberry-alike but flooding tkmax with your own unsold crap is a bit suicidal. We had a talk at work from someone from one of the big fashion houses and the markup I put in a previous post were not made up - they are mental. The 'value' such as it is is purely in image and exclusivity. The couture high end fashion garments are properly expensive to make but the Burberry relatively high volume stuff really isn't.

http://news.bbc.co.uk/1/hi/business/4381140.stm

That happened years ago.

Yeah I think it was about the time the sarcasm detection rates went down...

It's a similar tale from a few people, I guess nice bit of PR to remind people not to wait for the reductions, if you want to look like you can drop £500 on something you better find the £500.

I can’t even see perfume coming to that… it’s just some alcohol and a few chemicals.

You are probably right. The Estee Lauder factory (called a Lab, and does not have Estee Lauder on the side because they don't want to give the impression it's actually made in a factory - harvested by pixies obviously) is just near me and I've had a bit of a tour. Geekly fascinating. Packaging is the best bit - autonomous assembly lines folding up the boxes and at the end puffing a light blow of air into each box to get rid of any fine particles that might make the opening experience 'cheap'. And the machine putting on the lids then loosening them ever so slightly. Theory goes that very loose lids would feel poorly assembled and overly tight feels cheap. There is apparently just the right level of tightness to feel luxurious. That goes for a lot of things mind 😉

Anyway it appears a lot of the cost of manufacture is in the fine detail, not the raw material costs.

offset the RRP of your unsold tat against your annual profits, for a small percentage loss in actual production costs – or doesn’t it work like that ?

Nope.

It’s only worth something when someone buys it at that price.

This. In the UK, at least, stock is valued at the lower of cost and net realisable value.

And the machine putting on the lids then loosening them ever so slightly. Theory goes that very loose lids would feel poorly assembled and overly tight feels cheap. There is apparently just the right level of tightness to feel luxurious. That goes for a lot of things mind

LOL... couldn't help thinking of Shimano packaging....

I actually have a M7000 and M8000 box right by me both for the same product that only cosmetically different) and just tested... at first glance they seem the same except for colour .. the M8000 opens much easier....

Not sure why this is a story -

Many luxury goods manufacturers do this, and have been doing this for years.

Burberry was quite public about it a few years ago, they released a statement saying they are going to destroy unsold stock to avoid it showing up in places like TK Max etc. as the brand had become to devalued over the years.

Rather than burn it could they not shred it and use it for something else, insulation or something?

Or dye it badly, strip labels and ship to those places in the world where brands mean nothing but some clothes might be appreciated.

Burning seems a particularly wasteful solution if its clothes and as perfume doesn't go off just store it, reduce future production and slowly release it back to market in line with demand.  In the future actual do some decent demand planning

I used to do a fair bit of overstock liquidation for luxury clients - they're incredibly protective about where it ends up due to devaluation. At one point, the private members' shopping clubs were a good channel, but then they went for expansion and opened up to just about anyone, before long affiliate deals for private shopping clubs were on Groupon, Vouchercloud etc which was really harmful from a brand value perspective.

Burning is probably the only safe way to dispose of overstock - yes it's £28M at retail value but cost will be loads lower, but a 10% devaluation in the brand value due to a market flood of overstock would be a far bigger financial hit.

Seems none of us are fooled by the ‘value’ of the destroyed stock - it’s a terrible example of material excess though isn’t it.

So they burn tonnes of it to ensure the stuff they do sell costs enough to keep it out of the hands of, less stylish, poor people.

I do sometimes wonder if the whole shooting match will come crashing down in my lifetime and whether I’ll see the day when people will burn Burberry bags, not to protect the value of the brand, but because they’re far more valuable as kindling than a means to carry ones miniature dog/rat about.

So many ‘luxury’ goods are only valuable because they meant to be, from Diamonds sold in a virtual monopoly by De Beers to Coke sending reps to Cafes and Bars to make sure their post-mix isn’t sold too cheaply.

Strikes me that this is more about how the Fashion industry creates a protective Market operation to over inflate it's Brand Image. After all it's the Image you buy when choosing stuff like this.

Didn't they clean up their sweat shops in Sri Lanka when one collapsed killing loads of underage workers?

But I'm not surprised in the slightest that they have to burn over stock, no one I know wears the Tat.

More importantly is the raw materials they use for what is essentially no use what so ever. I think Greenpeace summed it up nicely yesterday.

Rather than burn it could they not shred it and use it for something else, insulation or something?

Or dye it badly, strip labels and ship to those places in the world where brands mean nothing but some clothes might be appreciated.

Those places already have lots of clothing manufacturing (including Burbury's).... its the same tat just different labels... why waste resources by shipping it back?

It's because its the same cheap tat that they need to burn it...

If it was a quality product a cheap supply on the market would be far less damaging...

I have a "quality shirt" (not Burberry) in my cupboard I bought back in the late 80's... it's still wearable and still presentable... its been worn a lot but the collar is still OK and its never lost a button or sticking frayed... it was actually made in the UK.

I have other shirts from the same manufacturer not 5yrs old that need chucking out all made in India/Bangladesh.

The only difference Burberry clothing or perfume has it the label.... last years scent or last years shirt are just that.

Burning seems a particularly wasteful solution if its clothes and as perfume doesn’t go off just store it, reduce future production and slowly release it back to market in line with demand.  In the future actual do some decent demand planning

Perfume is just some alcohol and scents... using it as fuel is surely better for the environment than using it as perfume. Not making it in the first place and instead using the plants that are used for alcohol as food would be even better 😀

But I’m not surprised in the slightest that they have to burn over stock, no one I know wears the Tat.

What sample of people is that?

People like me ;_0

Veblen goods.

Their value is as much about the status they convey as the quality of the product.  If they were less expensive they would be less popular.

And unlike properly high end goods like supercars and yachts most of the value is in the image not the materials

Its a horrible business model

I do sometimes wonder if the whole shooting match will come crashing down in my lifetime and whether I’ll see the day when people will burn Burberry bags, not to protect the value of the brand, but because they’re far more valuable as kindling than a means to carry ones miniature dog/rat about.

Have you seen the Daily Mail website recently!  The balloon lips, self obsessed generation seems to be growing - not reducing.

I have friend that works for a top marque car maker, who is for want of a better word, an engineering psychologist.  Namely, that not only do they want their controls, and switches, and seats and the like to be as good as possible, they also have to FEEL like they are the best available.  And while certain kit could be technically better (I don't know, maybe switches go from off to on faster or whatever) if they don't fit in the tactile experience of the whole environment, they won't get specced.

just the right level of tightness to feel luxurious.

amen to that 😉

That's BoJo's new plan. If he burns David Davis, Theresa May, JR Knob and Nigel Garage at the stake, then he will be instantly more desirable with increased value.

Given we burn approx 93 million barrels of oil a day, I can't see a few tonnes of clothes making much difference to human kinds ecological footprint!

Seems none of us are fooled by the ‘value’ of the destroyed stock – it’s a terrible example of material excess though isn’t it.

So they burn tonnes of it to ensure the stuff they do sell costs enough to keep it out of the hands of, less stylish, poor people.

It's what keeps the world turning....

If the people with money are stupid enough to buy it then what's the problem.  Those who can't afford it can get the same goods MUCH  cheaper...

Half my work stuff today is Sainsbury's own Tu or George etc..  It's still crap... its much cheaper crap though.

I can’t see the problem with burning it... I’m presuming, of course, that the kids who made it still got paid though?

Is this not a bit ridiculous in this so-called environmentally friendly day and age

"So-called" is the key phrase there. Corporates are generally as environmentally motiveated as the Tories are to social justice.

There used to be a Burberry outlet factory in east London years back, where they sold their own stuff cheap. WOnder if that is still there?

The fashion industry is really weird - an weirder still if you go to the really exclusive brands. I was chuckling yesterday at an article in the guardian about the FT's 'How to Spend it' magazine which is aimed at the really rich. Apparetnly thi is not a parody:

“My current order,” said Hackett, “is for some tan and white Oxfords … made from a batch of reindeer leather salvaged from the Metta Catharina – a 53-ton brigantine that sank off the southern coast of England during a voyage from St Petersburg to Genoa in 1786. The leather was tanned in St Petersburg by artisans whose techniques were secret for centuries … ” Hackett might have been joking – except that How to Spend It doesn’t do jokes.

https://www.theguardian.com/news/2018/jul/19/how-to-spend-it-the-shopping-list-for-the-1-percent

Half my work stuff today is Sainsbury’s own Tu or George etc..  It’s still crap… its much cheaper crap though.

Woah there.

I'm all for some cheap/fast fashion when I just need clothes to stop me being inappropriately naked in public. But supermarket stuff is almost always shite.

I've got a couple of tescos chino shorts for the summer, its not even august and they look tired. My M&S ones still look fine (and that's just m&s not even from somewhere expensive).

Most of my jeans are from sainsburys (OH buys them as she gets a ridiculous discount), aside from the fact they appear to have been cut by a blind person for a badly proportioned middle aged shopper who won't try them on before buying they last 6months top before either the fabric or the seams go. Back before the arse fell out of the economy in 2008 I bought a pair of Hilfiger jeans which are still pretty much as new, OK so I maybe take better care of them, but they're far better quality too.

I agree that burning excess stock is a waste, but buying supermarket clothing to throw away at 10x the rate is far worse. I'd rather have 1x pair of £100 trousers than 10x disposables from primark/tesco/asda.

They don’t want Burberry products to get into the hands of anyone who can sell them at a discount and devalue the brand

They might consider shutting the stable door once they've finished with their bonfire. Burberry is synonymous with Loadsamoney type scumbags for me now.

They might consider shutting the stable door once they’ve finished with their bonfire. Burberry is synonymous with Loadsamoney type scumbags for me now.

Not in their target markets though; hence it's still hugely successful no matter what you think of their designs..

Woah there.

I’m all for some cheap/fast fashion when I just need clothes to stop me being inappropriately naked in public. But supermarket stuff is almost always shite.

I’ve got a couple of tescos chino shorts for the summer, its not even august and they look tired. My M&S ones still look fine (and that’s just m&s not even from somewhere expensive).

Most of my jeans are from sainsburys (OH buys them as she gets a ridiculous discount), aside from the fact they appear to have been cut by a blind person for a badly proportioned middle aged shopper who won’t try them on before buying they last 6months top before either the fabric or the seams go. Back before the arse fell out of the economy in 2008 I bought a pair of Hilfiger jeans which are still pretty much as new, OK so I maybe take better care of them, but they’re far better quality too.

I agree that burning excess stock is a waste, but buying supermarket clothing to throw away at 10x the rate is far worse. I’d rather have 1x pair of £100 trousers than 10x disposables from primark/tesco/asda.

I can't get jeans there .. I have to resort to gap... but my Sainbury's Tu shirts are all lasting as well as anything from expensive brands...(Most of them are short

sleeved summer shirts but they are 4-5 yrs old  sleeved summer ones

My Morrisons JCB branded socks seem to last as well as the expensive socks the OH buys at XMAS... (and wore to work in Copenhagen over the winter) ... and also as long as some of the more expensive outdoors socks I buy...

Most of my cargo shorts are Debenhams reduced crag hoppers... (though not used for work)...

You could be right on Tesco... OH buys all Jnr's White Polo tops from Sainsbury's and they seem to last until he covers them in oil or tears them!  Then again he wrecks FF helmets and Fox Launch Pads  ... he could probably have clothes made of Kevlar and still tear them!  He has a special affinity for mud so he pretty much manages to need a hot wash every day... the current weather is a godsend... though.

From that "how to spend it article" up there

In the still slightly austere postwar Britain of 1967, ............... The new, monochrome page had an article about installing home central heating, then a relative luxury; about a new electric coffee maker; and about how to select and cook a pheasant

Sounds like typical posts from the STW forum.

The stuff wasn't worth £28 million. Nobody wanted to pay that amount for it.

It was basically worthless, that's why it was destroyed.

If the markup is indeed ~10x as mentioned above, then over-ordering this amount of stock is nine times less expensive than the loss of earnings if they had under-ordered by the same margin.

Its high end fashion, at 70% off its still not a cost effective way of insulating your body. nobody is going cold because of this.

If only they could control brand pricing by producing less. o_O

H&M do this too

They are all at it.