Last week finished on an interesting note with an article on the BBC about a well-known luxury fashion retailer who burnt £28million worth of stock to prevent it from being retailed at discounted prices.
This is not a new phenomenon. As it is unknown exactly who does what, I am going to make a bold statement here, but I am pretty sure that most large fashion retailers have incinerated stock at some point, either to avoid discounting, to get rid of faulty or damaged goods, or perhaps in some cases to dodge a copyright lawsuit.
While it can never be right, or even good for the environment as the above-mentioned retailer stated when confronted about it (!), there are valid reasons in a few cases. However, when it comes to burning stock because of having bought too much, it is definitely wrong.
There is often a sense that big businesses are inherently bad. I disagree with this viewpoint as big businesses provide jobs – and thereby food on the table – to many people. They also have the capacity and power to instigate and implement change and can often do this quicker than any government!
Too many of them are driven only by profits and growth though, and I would argue that these are the businesses ending up sacrificing the environment and valuable resources in order to achieve constant growth.
As I see it, there are two solutions to this problem, and they go beautifully hand in hand.
Firstly, I believe that it is time for businesses to start measuring their success on three areas: people, planet and profit, instead of profit alone. That way the aforementioned incident would never have happened as there would have been KPIs (key performance indicators) in the environmental area preventing the business from burning such large quantities of goods.
Secondly, we need to move away from this culture of businesses having to grow as much as possible all the time, and hence move away from the need to factor ‘end of season stock’ into the buying equation. Instead, we should move towards a culture where it is ok to sell out of a product, and it is ok not having enough stock to satisfy all customers. That way the brand becomes even more sought after and the business’ performance presumably less volatile.
There will of course always be stock left on the shelves at the end of a season (the ‘dogs’ as we call them), and there are many ways to get rid of that excess stock: sale, warehouse sale, outlets, stock buyers such as TK Maxx or donating to charity.
I understand that luxury fashion retailers want to protect their brand names and hence would like to avoid discounting product, and I am wondering if the way forward for them in terms of dealing with the ‘dogs’ is to keep the excess stock in storage for a period of time before they sell it via one of the above-mentioned channels. That way they maintain the exclusivity of the new stock and get rid of the old stock in a truly environmentally friendly manner.