Sale is unthinkable and destruction is now prohibited: Between careful inventory management, sales to staff, donations and recycling, luxury brands are organizing to dispose of unsold products.
“The big maneuvers have been going on for two years now”ahead of the implementation of the anti-waste law that has banned the destruction of unsold products last month, luxury expert Julie El Ghouzzi of the consultancy Cultz explains to AFP.
“It is a topic that has become important today”she adds, recalling the Burberry scandal in 2018. In its annual report, the British brand revealed that in 2017 it destroyed more than £28 million worth of goods to protect its brand, the equivalent of 20,000 of its iconic trench coats.
Following the uproar caused by this announcement, the brand had announced that it would stop the practice the following year.
Luxury houses are working now “extremely careful”confirms AFP Arnaud Cadart, portfolio manager at Flornoy, “ mentalities have changed, we are no longer in an economy of primacy with unbridled creation”nor in the idea of “it doesn’t matter the waste, and if it doesn’t work, we destroy”.
Because you don’t pay in luxury. Sell, may ask “a desirability problem”according to Julie El Ghouzzi. “In luxury, if a good is less expensive, there is less need to buy it. »
In this context, the first step to take is strict inventory management. Kering, owner of Gucci, Saint Laurent, Balenciaga, among others, indicates that it is investing in this “in artificial intelligence technologies”.
At its competitor LVMH (Vuitton, Dior, Celine, etc.), Hélène Valade, Director of Environmental Development, confirms that “the luxury model is (already) highly adapted to demand”, with few stocks. She does admit that the anti-waste law makes it necessary to know customers even better in order to adjust demand.
Julie El Ghouzzi points out that Louis Vuitton, LVMH’s flagship brand, is particularly efficient in this area: “They know exactly what they have in stock and can manage their stock exactly”. And “This is not the case with many other houses”she points out.
If, despite everything, unsold goods remain, selling at favorable prices to personnel is a solution: 150,000 employees at LVMH, 38,000 at Kering, 16,600 at Hermès; as well as donations to associations: LVMH has a partnership with Cravate Solidaire, its Kenzo house with Tissons la solidarité, Marc Jacobs in New York with the association Fabscrap, etc.
And then there is the recycling of products into new raw materials. “In the past, a designer with an extraordinary idea looked for the means to implement this idea”, Hélène Valade explains to AFP. “Nowadays, the process is sometimes reversed: there are certain designers who start from existing materials – old collections, fabrics sleeping in houses, leftover leather… – and have their genius idea”she says enthusiastically, just like Virgil Abloh at Vuitton.
LVMH has also signed a partnership with WeTurn, a start-up that specializes in recovering fibers to make new yarn spools.
At Kering, Balenciaga and Saint Laurent – for shoes – or even Alexander McQueen have developed projects with Revalorem, a company that recycles unsold items from the luxury industry into raw materials.
In 2020, Hermès, in turn, launched 39,000 products that were the result of an “upcycling” approach.
“The activities that destroy the most are fashion, leather goods and cosmetics”, explains Arnaud Cadart. But today their excellent health results more in stock outs than in surplus. “Since 2014, Hermès has practically nothing to throw away, everything is allowed”, according to Arnaud Cadart.
At LVMH, Hélène Valade confirms that “leather goods are currently rather in stock shortages”referring to, for example, a bag from the Loewe brand, made from scrap leather from the workshops.
And this despite a sales price of 1,700 euros.