The “reduction” of the warehouse redraws the industry: an increasingly widespread practice, but that provokes many reactions among the insiders
The last one was Burberry: as reported by Bloomberg, in the recent financial statements released by the company the elimination of products for a total value of 28.6 million pounds is reported, equal to about 32 million euro.
A practice that provoked many adverse reactions due to its undeniable environmental impact, even by investors, who complained that they were not consulted and thus lost the opportunity to buy surpluses.
The outgoing president John Peace has declared that the operations of “reduction” of the unsold are not taken lightly, while Gobbetti has specified that the skin Burberry, from 2017, is donated to Elvis & Kresse, a company that deals with giving new life to discarded products.
At the same time, now that the beauty line of the brand has passed to Coty, even a large number of cosmetics have been destroyed because they are now unusable: it is the paradox of the warehouse, the contradiction in terms that threatens the stability of the luxury market from inside .
In this regard, Burberry’s official note reads: “On the occasions when it is necessary to dispose of products, we do so responsibly and we continue to look for ways to reduce and re-evaluate our waste. This is a key part of our accountability strategy until 2022 and we have partnered and supported innovative organizations to help achieve this goal. An example is our partnership with the Make Fashion Circular initiative of the Ellen MacArthur Foundation, where we join other leading organizations to work towards a circular economy of fashion ».
And Burberry is certainly not the only brand to address the issue.
Only a few months ago, Quartz reported the Richemont case: the Swiss group bought back some products from the last two years from some of its dealers, for a total value of 481 million euros.
The operation has the stated aim to avoid that the precious watches of Cartier, Piaget and IWC among others end up on that “gray market” that Jean-Claude Biver, head of the watchmaking division of LVMH, has defined “a cancer”: a alternative market, in which different forms of “irregular” sales flow (from the outlet to unauthorized resellers to the real black market), where those same objects can be found at prices that are very different from those of the official card.
According to Richemont’s financial report, a part of the watches that were sadly unsold will be “re-located” in other regions compared to those in which they were initially distributed, while the rest will be dismantled and re-used (not destroyed).
On the other hand, Quartz always says, Richemont had started collecting watches from stores as early as 2016, especially in China and Hong Kong where the luxury market was beginning to slow even, at least in part, due to a tightening of anti-corruption policies undertaken by the Chinese government, which hit high officials and officers accustomed to giving themselves, among other things, expensive watches.
But what drives, today more than ever, companies to want to free – even physically, if necessary – excess goods rather than trying to “recycle”?
The most obvious and almost idiotic response in its brutality is that of preserving the exclusivity of its products and the value of the brand.
Take the Burberry case: the fierce disposal of the warehouse is but a part of the five-year plan drawn up by the managing director Marco Gobbetti, formerly Céline, the same one that Riccardo Tisci wanted to the creative direction of the historic British brand.
The repositioning strategy developed by Gobbetti aims to make the leather accessories sector increasingly central, which today accounts for less than 40% of revenues as reported by Business of Fashion (compared to the 55% collected by Gucci in the same sector).
Therefore, the recent acquisition of the Scandicci CF & P leather goods company must be read in this perspective, and other similar investments will probably be added in the future (and this, for example, is excellent news for Italian crafts districts high quality), and the emphasis placed on the creation of a center of excellence in leather processing, which encompasses and enlarges the core of a hundred artisans already specialized in the brand’s strength.
This is why the new course, awaiting Tisci’s debut in September, has already started again in March with the launch of the Belt-Bag, which is already going very well. The policy on price is also worth mentioning: the Belt-Bag, in fact, remains below two thousand euros because more than with the Hermès and the Chanel, which are on a higher level, wants to compete with the Gucci Ophidia or Marmont and the Louis Vuitton monograms.
At the same time, as already its direct competitors, even Burberry has lowered the price list on the Asian market.
That a stock exchange model is already recording excellent performance is an encouraging sign, but in the current state of the industry determining the success of a luxury item is increasingly a sort of alchemical formula.
For this reason Burberry has also redesigned the seasonality of the distribution, adopting the gradual release of products such as streetwear teaches, and now relies on Tisci, who was among the first to experience the new paradigm in unsuspecting times.
Eliminating garments and accessories from outlets and non-luxury retailers, such as large American shopping centers, and having, once and for all, those in excess, despite the cover of Chavs by Owen Jones: it is a more common operation than the one that one thinks it is also a precise literary genre, as told by Julie Zerbo on The Fashion Law.
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Zerbo also underlines how, to be honest, behind the policy of “burned” bags and dismantled watches, there could be, without any fantasy, very common fiscal reasons, at least for those who import from France to the United States.
The companies could in fact make use of repayments on the unsold against the duties paid, which in the case of luxury items are very high (from 16 to 60% depending on the fabrics on the bags, Zerbo specifies, from 11 to 50% on watches ).
If then it is not difficult to imagine a future where “only” one produces what the customer wants (or thinks he wants) tracing online movements, these practices bring us, already today, facing an enormous environmental, ethical and economic problem: are we sure we are dealing with it right?