A luxury brand is a company that offers high-quality products or services that are associated with rarity, excellence, and high prices. Luxury brands are often seen as status symbols and are popular among high-net-worth individuals and aspirational consumers.
By eliminating excess inventory, they uphold the perception of rarity and value, motivating consumers to purchase at full price without the fear of discounts diluting the brand’s image. This practice also safeguards against counterfeit products flooding the market, preserving the brand’s authenticity.
Luxury brands often burn their products for several reasons:
Scarcity and Exclusivity: By destroying unsold items, luxury brands maintain the perception of scarcity, which helps to uphold their exclusivity and allure. If products flood the market at discounted prices, it can dilute the brand’s prestige.
Brand Integrity: Destroying unsold goods protects the brand’s image. Luxury brands want to ensure that their products are only sold at full price in their stores or authorized retailers, preserving their perceived value.
Counterfeit Prevention: Burning excess inventory helps prevent counterfeiting. If unsold items were sold at lower prices, it could create opportunities for counterfeiters to exploit the brand’s reputation.
Control Over Distribution: By managing inventory tightly and destroying excess products, brands can control the market better and avoid any potential damage to their reputation from products being sold at discounted prices or in unauthorized channels.
Sustainability Concerns: Some brands claim that burning products is more environmentally friendly than allowing them to be sold at a discount, where they might end up being discarded after use.
While this practice has drawn criticism for its environmental impact and wastefulness, luxury brands continue to justify it as a strategy for maintaining their exclusivity and brand integrity.
Burberry
In 2017, Burberry burned unsold stock worth £28.6 million, which made global headlines. In response to media scrutiny, Burberry announced it had stopped incinerating clothes in September 2018.
Louis Vuitton
Along with other luxury brands like Chanel, Hermès, and Dior, Louis Vuitton has been known to burn unsold stock for decades.
Coach
Coach has been linked to the practice of destroying unsold clothes. Coach has claimed a tax credit for destroyed products, but the company says this statement is false.
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By Riya Saini
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