Close Menu

Retail giants like Hermes, Burberry, Chanel, and LV can use artificial intelligence and machine learning to avoid waste of product

2 min read

“In 2018, The British luxury brand Burberry brought in $3.6 billion in revenue — and destroyed $36.8 million worth of its own merchandise.”

In today’s world, there is more merchandise than ever before. In the presence of social media and the internet, fashion trends experience rapid turnover, resulting in a faster fashion cycle. Pandemic supply chain disruption likely will have provided only a brief pause in this for many, as brands have been slow to adapt, resulting in excess inventory and the burning of merchandise to maintain the brand reputation.

Richemont, a major player in the luxury industry and the owner of the jewelry and watch brands Cartier, Piaget, and Baume & Mercier, admitted that in an effort to keep its products out of the hands of unauthorized sellers, had destroyed about $563 million worth of watches between 2017 and 2019.

“It’s the biggest open secret in the fashion industry because it proves how inefficient the current system is; that it’s cheaper to burn these amazing products than to produce less,” said Orsola de Castro, co-founder of advocacy group Fashion Revolution. Additionally, the fashion industry is believed to be one of the largest contributors to global warming, reportedly being responsible for around 20% of the world’s industrial water pollution and 10% of the overall air pollution.

Polyester is made in factories with ethylene (derived from petroleum), which accounts for roughly 60% of the total fiber market. Additionally, merchandise that is destroyed a lot of chemicals, hardware, and coatings embedded goes directly into the air, when merchandise is burned leading to a contribution to C02. With that in mind leading fashion brands can use alternate, more sustainable fabrics such as cotton and silk blends or cellulosic fiber textiles like moda, tencel, and lyocell.

Younger brands like Stella McCartney, Guyana, and Boden have come to the realization that by better utilizing transactional data while staying ahead of shifts in customer buying patterns, decision-makers can successfully stay ahead of the competition and avoid overproduction of merchandise and excess distribution.

As the supply chain constraints of the pandemic ease and it becomes more likely to be a problem of producing too much rather than not being able to procure enough, it is time that larger, legacy organizations start to look at better ways to leverage newer technologies to make better data-driven decisions all the way from the supply to the demand side. No easy feat, but the technology, the market moment, and the consumer appetite exist to make this paradigm shift. Fashion brands should rely on data to make more sustainable decisions and educate their customers to be responsible which could be a win-win for both business and the environment.