The Fiery Secret of Louis Vuitton

Picture this. It’s the end of the year and there is a bonfire. However, instead of the fire being fueled with twigs and kindling, in it is all the unsold LV bags thrown in large flames, left to burn and disintegrate. A scary nightmare, right? Wrong. A very scary and tragic reality and we have a lot of questions. Let’s break it down.

We wonder how after all these years high-end brands such as LV and Chanel have managed to uphold their claim to fame and stay relevant in today’s current fashion market. Rarely do you see these brands advertising sales. So what else what one might do to maintain their exclusivity- Set it on fire!

Every year companies face dead inventory: the silent killers of retail. This is all the left-over merchandise that did not sell. To make up for the loss’s companies will capitalize on the US duty drawback law.

Thefashionlaw.com states, “In accordance with U.S. Customs and Border Protection program (and 19 USC § 1313, the section of U.S. Code, which centers on “drawback and refunds”), “If imported merchandise is unused and exported or destroyed under Customs supervision, 99 percent of the duties, taxes or fees paid on the merchandise by reason of importation may be recovered as drawback.”

If something imported in the country after paying duty in it is destroyed with customs’ notice the duty is paid back. LV bags have an extremely high duty rate of 15-25 percent on average so it’s one way to make up for the loss of sales. Is this legal? Well, let me attend law school quickly and get right back to you. 

We must acknowledge that LV has never put out a statement confirming nor denying committing this atrocity. However, the fashion community has played its part in deactivating to compile some pretty compelling evidence. The Fashion Law claims that analytical observation of Louis Vuitton employees’ LinkedIn profiles “including “logistics supervisors” – whose duties include, “Perform[ing] reporting and follow-up activities related to duty drawback for both product destruction and product export” – give some potential credence to the theory that luxury goods brands are destroying some of their most esteemed goods.” It seems pretty suspicious to me. But don’t worry the luxury brand will always hold a sale for the employee before the burning occurs. 

By maintaining unsold inventory in such a way LV ensures that the available supply matches the demand. This allows for the stability of LV crazy high prices. Scoring one of these bad boys at a discounted price means buying second hand from someone who definitely spent full price. The thinking behind this makes sense-by never going on sale the company is able to maintain a level of exclusivity. Staying true to this system has paid off, as a company could lose sales from people waiting to purchase because they are waiting for sales.

Rumors of other companies have been mentioned setting fire to the flame, such as H&M and Nike. While no companies have been so forthcoming with information, Burberry proved to be the black sheep. According to Vox, “in July 2018, the brand admitted in its annual report that demolishing goods was just part of its strategy to preserve its reputation of exclusivity.” Destroying $36.8 million worth of its own merchandise. The publicity of this news resulted in many boycotting the brand and demanding the British Government to refine law in relation. 

With the increasing talk of the fate of the world with climate change opens us, now appears to be the best time ever to finally crackdown on these practices. The fashion industry is often cited as one of the world’s worst polluters — but destroying perfectly usable merchandise in an effort to maintain prestige is perhaps the dirtiest secret of them all. If people can successfully live zero-waste lifestyles, then there must be someone on these teams who are innovative enough to find solutions that don’t require burning the products down.

It is the year of REDUCE REUSE RECYCLE, and what else would be cooler than LVs newest line containing reconstructed recycled bags. Bet you could put a pretty fire price tag on them too.