In the annual report for the year 2017-18, UK-based luxury fashion giant Burberry Group PLC (Burberry)mentioned that it had physically destroyed surplus stock worth £ 28.6 million. Experts said that the company had destroyed excess stock to maintain its exclusivity, while Burberry maintained that it wanted to avoid its clothes falling into the hands of counterfeiters and grey marketers who could sell them at a discount,thereby devaluing the brand. The total value of goods destroyed by the label since 2013 was £ 90 million.The company faced a huge backlash from analysts and environmentalists for opting to incinerate the stock when it could have given it to charity instead or used it in some other way. The criticsvoiced their outrageon various social media platforms. Burberry eventually called off its policy of burning excess stockand pledged to instead recycle it.It also decided that it wouldno longer use fur in its clothing. The company associated with sustainable luxury company Elvis & Kresse to frame a strategy for reusing the surplus stock. Burberry’s chief executive Marco Gobbetti (Gobbetti) and chief creative officer Riccardo Tisci (Tisci) had the big responsibility of coming up with substitute strategies to utilize the surplus stock and revive the image of Burberry, which was severely dented after the incident.
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Issues
The case is structured to achieve the following teaching objectives:
Understand issues related to corporate sustainability and being an environmentally responsible company.
Discuss how controversies affect businesses.
Evaluate the methods by which companies can practice sustainable inventory management.
Discuss how luxury fashion companies can resort to sustainable practices to manage their surplus stock.
Analyze the importance of ethical decision making in business.
