The Dark Side of Luxury Fashion
The fashion industry continues to be at the forefront of almost every discussion about pollution, with fast fashion being scrutinized the most. While numerous high-end brands boast about their supposedly sustainable practices because they design for longevity and produce smaller quantities than fast fashion brands, the reality is that they have a dark secret, too – they often over-produce their items. But what happens with the excess and can this incredibly complex problem be solved?
The fashion business model is shaped in a way that maximizes production efficiency because over-ordering is viewed as cheaper than the risk of not being able to sell products to potential customers because stock is unavailable. When these products are produced, what happens with them, when they don’t sell from season to season? In order to remain prestigious and uphold a certain level of exclusivity, luxury brands avoid selling their products at discounted prices, which has led them to deliberately burn, shred, or otherwise destroy their excess stock. The most prominent examples of this come from two of the biggest players in the industry – LVMH and Kering.
LVMH Group, which owns several luxury fashion houses, such as Louis Vuitton, Dior, Fendi, Givenchy, and Bulgari deals with an astounding 3.2 billion euros worth of unsold inventory. This consists of sneakers, handbags, accessories, ready-to-wear items, and even beauty products, such as make-up and perfume, that have never even been touched by a consumer, much less sold to one. These items have ended up on an industrial site near the French-Belgian border, where they are being disposed of improperly.
Kering, a French luxury group, which owns iconic brands such as Gucci, Saint Laurent, Balenciaga, Bottega Veneta, as well as Alexander McQueen and Brioni deals with excess inventory valued at 1.5 billion euros. According to Business of Fashion, this number has more than doubled from 2014 to 2023.
Burberry too has been under fire for its environmental practices after releasing information that they had burned nearly 35 million euros worth of goods in 2017. Faced with significant public backlash, the British luxury company vowed to stop destroying unsold items within months. It took regulators stepping in for other corporations to follow suit. In 2022, Kering announced plans to stop destroying any unsold stock from 2022 onward, following heavy regulation and the ban of the practice in France.
How else are luxury companies going about fixing this problem? Kering, for one, has decided to turn to artificial intelligence in an attempt to help improve sales forecasting and minimize the amount of unsold goods, whereas LVMH has partnered with Google in 2021 in order to do the same. Kering has reported that it succeeded in improving the accuracy of its inventory predictions by 20%, with the number continuing to rise. Luxury brands have also started forging relationships with charities and schools to donate and upcycle leftover products, in addition to hosting sales for staff, friends and family, which Hermès has reported generates them more than 100 million euros every year. Companies are also looking into repurposing unsold stock, Gucci has created a Continuum project, which incorporates past pieces into new products through collaborations with different designers and brands.
In conclusion, this is a persistent issue that requires a complete transformation of the luxury fashion industry practices. To truly tackle this issue, large corporations, such as LVMH and Kering must prioritize transparency, circular economy principles and follow regulations in order to allow the industry to progress into a more conscious and sustainable one.
Source: Business of Fashion
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