BoF Professional Member Exclusive: articles & analysis available only to you. View the archive. lg Professional ! CEO TALK Burberry Stops Destroying Product and Bans Real Fur A PR backlash enveloped Burberry following the revelation that it destroyed £28.6 million worth of unsold product last year. Now, the company is ending the practice and banning animal fur. In a global exclusive interview, BoF's Imran Amed sits down with Burberry CEO Marco Gobbetti to decode the thinking behind the move. BY IMRAN AMED SEPTEMBER 6, 2018 05:28 ACTION REQUIRED: You are currently missing out on important BoF Professional membership beneNts. Click here to rectify. LONDON, United Kingdom — Burberry is stopping its longstanding practice of destroying unsold product after a firestorm of negative press and social media posts in July. That month, it emerged that the British brand had destroyed £28.6 million ($36.8 million) worth of product — including clothing, accessories and perfume — in fiscal 2017/2018. The company has destroyed £105 million ($135 million) of unsold product in the last five years, a practice it has previously disclosed in its annual reports. Alongside the shift, Burberry is also banning the use of animal fur — including rabbit, fox, mink and Asiatic raccoon, as well as angora — in its runway collections, beginning with new chief creative officer Riccardo Tisci’s highly anticipated debut collection set to be unveiled on September 17 at London Fashion Week. Existing fur products will be phased out over time, however the brand will continue to sell products made with shearling. “Modern luxury means being socially and environmentally responsible. This belief is core to us at Burberry and key to our long-term success,” said chief executive Marco Gobbetti in a statement. But clearly, the negative publicity was a wake-up call for the British luxury behemoth. “We are in the midst of an environmental crisis exacerbated by the fashion industry,” read an open letter to Burberry from second-hand retailer ThredUp, which captured the sentiment of the backlash. “Fashion is now responsible for 10 percent of global carbon emissions and is projected to drain a quarter of the world’s carbon budget by 2050. We respect the desire to protect your brand image but discounting your product shouldn’t be scarier than setting it on fire.” Burberry is not the only fashion or luxury brand to have destroyed product. Last November, H&M was reported to have burned unsold products. According to the New York Times, Nike slashes its unsold sneakers. And, Richemont has reportedly destroyed more than £400 million worth of watches from high-end brands including Cartier and Jaeger-LeCoultre. Indeed, it is one of the industry’s dirty secrets that brands regularly destroy product to protect their intellectual property from counterfeiters and to limit the diminished brand perception that comes with disposing of excess stock through heavy discounting. Burberry says its new.

1. BoF Professional Member Exclusive: articles & analysis
available only to you. View the archive.
lg Professional !
CEO TALK
Burberry Stops Destroying Product and Bans Real Fur
A PR backlash enveloped Burberry following the revelation that
it destroyed £28.6 million worth of unsold product last year.
Now, the company is ending the practice and banning animal
fur. In a global exclusive interview, BoF's
Imran Amed sits down with Burberry CEO Marco Gobbetti to
decode the thinking behind the move.
BY IMRAN AMED
SEPTEMBER 6, 2018 05:28
ACTION REQUIRED: You are currently missing out on
important BoF Professional membership beneNts. Click here to
rectify.
LONDON, United Kingdom — Burberry is stopping its
longstanding practice of destroying unsold product after a
firestorm of negative press and social media posts in July. That
month, it emerged that the British brand had destroyed £28.6
million ($36.8 million) worth of product — including clothing,
accessories
and perfume — in fiscal 2017/2018. The company has destroyed
£105 million ($135 million) of unsold product in the last five

2. years, a practice it has previously disclosed in its annual
reports.
Alongside the shift, Burberry is also banning the use of animal
fur — including rabbit, fox, mink and Asiatic raccoon, as well
as angora — in its runway collections, beginning with new chief
creative officer Riccardo Tisci’s highly anticipated debut
collection set to be unveiled on September 17 at London
Fashion Week.
Existing fur products will be phased out over time, however the
brand will continue to sell products made with shearling.
“Modern luxury means being socially and environmentally
responsible. This belief is core to us at Burberry and key to our
long-term success,” said chief executive Marco Gobbetti in a
statement.
But clearly, the negative publicity was a wake-up call for the
British luxury behemoth. “We are in the midst of an
environmental crisis exacerbated by the fashion industry,” read
an open letter to Burberry from second-hand retailer ThredUp,
which captured the sentiment of the backlash. “Fashion is now
responsible
for 10 percent of global carbon emissions and is projected to
drain a quarter of the world’s carbon budget by 2050. We
respect the desire to protect your brand image but discounting
your product shouldn’t be scarier than setting it on fire.”
Burberry is not the only fashion or luxury brand to have
destroyed product. Last November, H&M was reported to have
burned unsold products. According to the New York Times,
Nike slashes its unsold sneakers. And, Richemont has reportedly
destroyed more than £400 million worth of watches from high-
end
brands including Cartier and Jaeger-LeCoultre.

3. Indeed, it is one of the industry’s dirty secrets that brands
regularly destroy product to protect their intellectual property
from counterfeiters and to limit the diminished brand perception
that comes with disposing of excess stock through heavy
discounting.
Burberry says its new policy on the disposal of unsold product
dovetails with the wider business and merchandising strategy
that Gobbetti has been putting in place since he officially took
the reins as CEO from Christopher Bailey in July 2017. The
company has previously revealed that it is moving toward a new
delivery model of tighter, more frequent collections — or
“drops” in the parlance of streetwear — that will take a more
targeted approach to product development and distribution and
create less waste in the process. This new merchandising
strategy is expected to be the cornerstone of Tisci’s new
creative vision for
Burberry.
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Until now, Burberry has not spoken publicly about what it calls
its "responsibility agenda." Gobbetti sat down with BoF’s Imran
Amed to explain his thinking.
Imran Amed: This is an important announcement. Burberry has
employed this practice of product destruction for many years —
and we know that it is a widely used practice throughout the
industry. What is the rationale for making this change now?
Marco Gobbetti: Last year we launched a new responsibility
agenda, which is quite a broad agenda. Already part of our
agenda was how we are dealing with waste and end-of-life
products. So, within what is labelled as ‘destruction,' there is
already a significant part that is recycled or used or donated.
That was the first

4. step.
The second element is that we are also changing the way we
operate and our targets in terms of operational efficiency. The
main point is how we look at our model, from design [all the
way] to stores. We started with our design and a merchandising
approach that is completely changing from the past. Having
more
frequent and tighter collections that can be really targeted —
whether they're targeted from a calendar point of view for some
form of event, geography or function — that allows you to be
much more precise in the way you design, you buy and you sell.
And the other element is the fact that we also have a big
project, which is advancing and progressing well, [focused] on
having a clear global view of our inventory and being able to
manage it more efficiently.
So, with all of this, we are now in a position to [stop]
destroying finished products, which we think, frankly, is just
not modern. We think that modern luxury that doesn't take into
account the social and environmental responsibility really has
no meaning. It's an important belief that we have in the
company. And it's
not just Riccardo and myself. I think this is embedded in the
culture of the company and the people here. We don't think it's
relevant going forward. You have to start from design and think
what impact it has on the world.
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IA: There was a huge backlash in July when it emerged that
£28.6 million of products were destroyed last year. Surely this
must have played some part in the decision to make the
announcement now? One of the reasons brands like Burberry
have destroyed unsold product is to protect the

5. brand. But now, destroying product can also be damaging to the
brand.
MG: Absolutely. Now, to your first point, it certainly has
accelerated something that was already in progress. Clearly,
we're responding very quickly to the second part of your
question, where you said it's not like what it used to be in the
old days, where [brands] want to destroy everything because
customers wouldn't
be happy — no, now customers are not happy if you don't care
about the environment they live in.
So, I think you have to approach this in the same way you
approach our business. Our business is about creativity. You
can be creative in a way that you structure and you change your
business model. We know it's doable because we have already
been working on it and are well on our way.
By the way, you know that that number was inflated by that
beauty transaction [signing a licensing deal with Coty] last
year. We had a lot of beauty inventory. That was a one-time
thing. Otherwise, we [would be] far from that number. It was a
very specific situation. But at the same time, we are transparent
about it. We
write it. It’s been in our annual report and we've been writing
that for a very long time.
IA: Which made me wonder: this practice has been disclosed in
Burberry's annual report for years. Why do you think this year it
became such a flashpoint now?
MG: I think it's because it's the world we live in today. This is
what people care about today. We care about this — and our
people here care about this. We do it first and foremost for us,
for who we are, for who our customers will be. There's an
obvious link with who you are [as a brand] and the customers

6. that you
attract. As you said, it has been in our numbers and in our
reports for a long time, but people care a lot more about that
today. Even if you capture the energy [created] in the process of
destroying or incinerating the product, it still doesn't feel right.
It's not right.
IA: Now that you've decided to stop this practice going forward,
what measures will you have to take to protect brand and IP?
Because there are still risks. Where will this product go and
how will you ensure you are still protecting the Burberry brand
and its products?
MG: As I said, I think there are a number of processes and
progress that we have made so far that gave us the confidence to
go all the way. We were already working on finding important
alternatives to [product] destruction, and a big part of that we
had already solved. Beauty is a bit of an exception, because as
you
know, beauty products expire and when they expire, there's no
legal way to recycle them. You are obliged to destroy them
because they are hazardous. This is a specific thing, and last
year it was also exacerbated by that fact. But frankly speaking,
we also have a business model that is based on full-price stores,
and we
also have some outlets and so we have also in our business
model the capacity of exiting a lot the necessary amount of end-
of-season products that we generate. We know that it won’t be
an issue for us — it’s not going to change anything for us in
terms of distribution or IP.
"
Burberry Stops Destroying Product and Bans Real Fur | CEO
Talk, ...
https://www.businessoffashion.com/articles/professional/burberr

7. y-st...
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IA: You can have solutions that dispose of the waste and the
excess product at the end of the cycle, but as you say there are
things further up the value chain that can also help us to ensure
we are creating products that the customer actually wants. There
is all this technology available now —
AI, machine learning — that helps us to predict what people
want. Will you be employing this kind of technology to limit
the amount of wasteful product that comes at the end?
MG: Definitely. That technology is used more today if you work
in digital marketing than it is in predictive merchandising, if we
can call it that. But we're certainly very, very, very interested in
that and we’re studying ways to do that. Do we have anything
right now that is working? No. But I think it is definitely the
next
area where we want to apply that. I think there is a lot of
possibility in there, a lot of potential in there, together with
having collections that are more targeted and focused.
IA: So tell me why that model works better when it comes to
waste.
MG: [It works] simply because the collection is more targeted
and more relevant, they have a point of view, they have a
meaning to exist. They don't just fill a merchandising brief that
is about the tops and the bottoms and coats. And then you have
this volume of product that has to cover a season that is
designed at
one point in time. You know better than me that the velocity of
the consumer is changing, so by the time they finish designing

8. it and by the time it's delivered to the stores, things have
evolved.
You have calendar occasions that are important, you have
weather and geographical occasions that are different from one
another. For us, for example, outerwear is a pillar of our
company, but clearly there are markets where outerwear is more
important and other markets where casual products are more
important.
And then you also have collaborations — ideas that run around
the function of a product or a type of product. You target a
certain client. You have a collection that is more casual or a
collection that is more elegant for occasions. By breaking that
down, if you can create the system to work on that then
obviously it gives
you your focus and your target.
IA: How hard is it to switch from the current model to this new
model?
MG: It's a switch. We shouldn't underplay it or overplay it. I
believe that it's just a way that we need to organise ourselves. I
think we are doing it already, but it's a transition and it's takes
an adjustment for everybody from design to communication and
people in the store with our clients. So, it’s not irrelevant but I
think it’s going to give us great leap forward, and it helps very
much in managing inventory.
IA: Your other announcement is that you're removing real fur
from Burberry's collections. There are other brands that have
already made that decision. What was the motivation here. Did
that come from Riccardo?
MG: As you know, already, there hasn’t been fur on the runway
already for [two seaons] at Burberry. It was not really part of

9. the creative vision and what we stand for. And then I think that
frankly I don't think it is compatible with modern luxury and
with the environment in which we live, and Riccardo has a very
strong view as well on this. It's part of what Burberry is today.
We're announcing it and we're making a firm commitment on it.
There's a little bit to phase out as there is still some in the
stores and we will phase it out, but it was already not a part of
our creative thinking. It clarifies our position.
IA: When you make a decision like this, as the CEO of the
business, you obviously have some cost-benefit analysis to do
in terms of the impact of these kinds of decisions. It sounds like
fur was a small part of the business so the impact will be small.
But when it comes to product destruction,
how do you think about the numbers around making a decision
like that?
MG: Well clearly we do think about that because we are a
public company and we have an obligation to all of our
stakeholders including our shareholders. In the end, I think it is
a bigger decision than just numbers and I think that the value of
this decision goes beyond the investment that we're making. At
the same
time, as we already initiated this trajectory, we think that the
impact will not be material for our accounts. We’ll be more
specific when we will announce our results for the six months at
the end of the year, but we are in position where it won't be
material for us.
But of course there are implications, some that are monetary
and some that are about the way we work. It's a change in the
way we work and it's one of the objectives of the company as of
today, immediately. We will focus our attention and resources
on that.
IA: This responsibility agenda is something Burberry hasn't

10. spoken much about before. Why do you think the fashion
industry has been so quiet about these topics? Why do
companies — even if they have programmes like this in place —
not talk about it?
MG: Honestly, I do think that it was not done before for good
reasons — not necessarily that it was a good decision — but it
was for good reasons. We don't want ever to use those to
promote the commercial aspect of the brand.
IA: You don't want to be seen as ‘greenwashing.’
MG: This is why there is a wall and there is the Burberry
Foundation to which the commercial company donates 1 percent
of profit before taxes. The foundation is investing those funds
in the communities according to its own agenda, which is
separate from commercial. So, I think it was done for the good
reason that
we didn't want to use it as a promotional tool or greenwashing
as you say. I think that people care very much about this —
much more than they cared about it before. I think that we need
to stimulate the conversation there and we have to bring people
along on the journey, and that's not just people in the industry
but
everyone.
I think the programmes that we are doing with the foundation
have a difference. We have an objective of positively impacting
one million people. We want to do it — and we are doing it in
the areas that we have relevance and in areas where where we
can be of help. The times have changed and it was probably the
right
decision not to talk about it awhile back, but now is the right
time to be doing the things we’re doing and also to talk about it.
IA: You mentioned the employees before. Thinking about your

11. teams here in the Burberry offices, I wonder what role your
employees play in the shift in the stage? I can imagine if I were
a Burberry employee and I saw that news break that I might be
really upset about it.
MG: Sure, we are upset. They were upset. We are doing a lot
and for the right reasons, but we got picked up on something we
were doing that was not right and we needed to correct it, but it
has overshadowed all the good that we all as employees are
doing here. This is also why I think at this point in time we do
have to
make it happen and talk about it in the right way, with the right
objectives and the right reasons, while keeping the two
organisations and agendas really separate and completely
independent. It is about the people, who we are and what we
believe.
IA: Burberry will be one of the first companies to publicly
announce that they are no longer employing this practice of
destroying product. Do you hope that others will follow this
example?
MG: Yes I hope they will follow this example. I think it's
doable and it's compatible. Actually, I think not doing it is
incompatible with modern luxury. We have to care. I'm sure that
in all different forms [there will be others]. I don't believe in a
rulebook and that you have to do things because others are
doing it. You
have to do it when the time is right and when it makes sense.
But as I said before, when we were talking about the investment
and cost, I think it is an overarching value in being authentic
and transparent with consumers, and caring about what they are
about.
IA: In other parts of the industry, the practice is widely used
and yet it's not disclosed. You were called out because of your

12. transparency. But hopefully..
MG: …Hopefully something very good will come out of it. And
we will continue to be transparent about it, so it will show that
we're doing what we're saying. Again, this is not a manifesto. I
don't think we're in a position to tell other people what they
should do and I don't ever want to do that. We care, we think
it's
important and I'm pretty sure that there will be other people out
there in our industry who think the same way.
This interview has been edited and condensed for clarity
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