The French government seeks to impose a ban that would prevent companies from destroying unsold goods. Aiming to cut back the significant environmental impact of the country’s topmost money-making businesses, France has taken a step towards environmental conservation by taking aim at this wasteful practice undertaken by luxury brands.
Francois-Henri Pinault, the CEO of luxury fashion amalgamation Kering SA, has been appointed by the French president Emmanuel Macron, with the responsibility of bringing together luxury brands from around the world (including Gucci, Yves Saint Lauren, and others) to reach their sustainability goals.
For a long time, high-end luxury labels have preferred to burn their unsold products or bury them in landfills instead of risking the harm that would be caused to their brand image by selling at lower prices. Each year luxury goods are destroyed by the brands, giving the impression they are against sustainability efforts that are slowly permeating the industry. In 2017, Burberry destroyed unsold goods estimated at $37 million - a move that drew public backlash and shocked investors. Luxury labels like Richemont and Louis Vuitton have been accused of destroying unsold watches and handbags, so they are not sold at reduced prices. Even companies like Nike have faced similar allegations.
France is one of the first countries to take action and make sure that no brand violates the borders of the environment. The French government has asked the brands to handle the matter at the industry level. This initiative will help ensure progress on issues including ocean health, biodiversity and climate change during this summer’s Group of Seven summit in Biarritz.
We can see the efforts towards biodiversity conservation increasing all-around. Last year Burberry came out to announce that the company would stop destroying unsold merchandise and stop the use of animal fur. Just in the last weeks, LVMH, the group that owns Louis Vuitton and Dior, declared a partnership with United Nations Educational, Scientific and Cultural Organisation on biodiversity conservation. One of its aims is protecting key ecosystems that are important to these posh businesses. Prada has recently announced that it will stop using real fur in its collections as a support to the cause. This ban by Prada will come into existence this September for its SS’2020 collections.
Still, from a business and branding perspective, eliminating the practice of destroying unsold high-end goods is sure to be a shock to the fashion industry. It might be tough for luxury brands to find other ways to dispose of $2,500 jackets or $1,000 shoes as they don’t intend to give away unsold items and will lose out on the status value they currently provide if they choose to discount products. This is sure to impact their sales and business models.