A recent trend among luxury brands is to burn old inventory. Fred Parrish recently commented on this trend.
Are luxury brands trying to protect brand equity by burning their old inventory?
Well that’s what they say, and these companies do spend millions of dollars building their brand. The really high end company do not want to see their product on people who otherwise would not be able to afford them. These brands feel that by destroying old inventory their performing a service for their existing clients(customers).
If you’re wearing a very high end piece of clothing you don’t want to see it in a regular department store, correct?
That’s exactly right, and that’s the reason they do this. The European companies also get tax benefits for destroying their inventory if they handle it in a certain way.