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French luxury houses give unsold goods a second chance

PARIS (AFP) – In the extravagant world of the French luxury industry, brands used to prefer destroying their unsold goods rather than offering their high-priced products at a discount.

But gone are the days of binning the coats, handbags and shoes pooh-poohed by shoppers after a new anti-waste law came into force at the start of the year.

Now luxury houses are managing their stocks more carefully, offering deals to staff, making donations and recycling goods.

“It’s a subject that has become important today,” said luxury goods expert at the Cultz consulting agency Julie El Ghouzzi.

She pointed to the scandal that engulfed Burberry in 2018 after the British luxury brand disclosed that it had destroyed GBP28 million of unsold goods in 2017 – the equivalent of 20,000 of its trench coats.

Following the firestorm the revelation triggered, Burberry announced it would halt the practice from the following year.

Markdowns to move goods are not an option in the luxury business as lower prices can undermine the attractiveness of their labels, which thrive on their elite status.

Luxury brands such as Louis Vuitton are managing stocks more carefully, recycling goods and making donations as trashing unsold goods are no longer an option. PHOTO: AFP

“In the luxury sector, if the price tag is lower, so is the desire to buy it,” said El Ghouzzi.
Luxury houses are paying more attention to the subject now, said portfolio manager at Paris-based asset manager Flornoy Arnaud Cadart.

“Mentalities have changed, we’re no longer in an economy that values unbridled creation above all else,” he said.

Also gone is the mentality that “if it doesn’t work we’ll destroy it”, said Cadart. Now luxury houses strive to fine-tune their stocks.

The Kering group, which owns the Gucci, Saint Laurent, and Balenciaga labels among others, has invested in artificial intelligence (AI) to better manage its stock.

At its competitor LVMH, the world’s largest luxury group that includes Louis Vuitton, Dior, and Celine among many others, Environmental Development Director Helene Valade said “the luxury business model is closely adjusted to demand” with low levels of stock being held by the firms.

Nevertheless, she acknowledged that the new law will push luxury houses to learn even more about their clients to better anticipate their purchases and thus reduce stocks to a minimum.

El Ghouzzi said Louis Vuitton is already quite good at keeping track of its stock.

When there are, nevertheless, unsold goods, selling them to staff at advantageous prices is
one option.

These large fashion groups have large staffs, with more than 150,000 employees at LVMH, 38,000 at Kering and 16,600 at Hermes. Gifts to associations is another option.

LVMH has a partnership with Cravate Solidaire, an association that collects donations of professional clothing and provides it to people with disadvantaged backgrounds trying to land jobs.

Designers have also begun to make use of discarded or leftover materials, a practice often
called upcycling.

“Previously, a designer with a brilliant idea would go search for materials to realise their idea,” LVMH’s Valade told AFP.

“Today, the process is sometimes the reverse: there are certain designers who start with the materials at hand – old collections, unused fabric hanging about, leftover bits of leather… and it inspires them,” she said.

This was the case for late American designer Virgil Abloh, who was the artistic director of Louis Vuitton’s menswear collection from 2018 until his death in 2021.

Marc Jacobs in New York works with Fabscrap, which recycles unused fabric to create insulation or products like furniture lining, or donates it to students and artists to use for their creations.

LVMH also has a partnership with WeTurn, which collects unsold clothing and material to recycle it into new thread and fabric.

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