Two of the world's biggest luxury brands may be sitting on a whopping €4.7 billion worth of unsold goods (around $5.1 billion at the current exchange rate). That's enough to make even the most fashionable among us raise an eyebrow.
What's happening?
LVMH and Kering, the parent companies behind brands like Louis Vuitton, Gucci, and Saint Laurent, saw their unsold inventory more than double between 2014 and 2023, according to La Conceria's summary of Business of Fashion analysis.
In 2023 alone, LVMH reported €3.2 billion ($3.5 billion) in unsold goods, while Kering clocked in at €1.5 billion ($1.6 billion). That's a whole lot of handbags and stilettos gathering dust.
Why is this excess inventory concerning?
This mountain of unsold luxury items is bad for business and terrible for our planet. The fashion industry is already a significant contributor to Earth's overheating, and excess production only amplifies the problem.
Think about all the resources that go into creating these products: water for growing cotton, energy for manufacturing, and fuel for shipping. When items don't sell, those resources effectively vanish into thin air.
Plus, there's the waste factor. In the past, some luxury brands would reportedly destroy unsold items to protect their image. While that practice is becoming less common (and is now banned in France), per La Conceria, finding eco-friendly solutions for thousands to millions of unused products is a massive challenge.
Are luxury brands doing anything about this?
Both LVMH and Kering are aware of the issue, but their solutions are still a work in progress. At the time of the report in March, LVMH said that it expected to sell much of its excess inventory in 2024, per La Conceria.
Meanwhile, Kering says it has been working on more sustainable production practices across its brands, including waterless dyeing and supporting regenerative farming practices (which supports biodiversity by prioritizing soil health and aims to avoid toxic chemical fertilizers and herbicides, among other things, as the Natural Resources Defense Council explains).
It's worth noting that luxury brands aren't alone in this struggle. The entire fashion industry grapples with aligning supply and demand, especially given the fickle nature of trends, and the fast fashion sector is one of the worst offenders.
🗣️ Which of these factors would most effectively motivate you to recycle old clothes and electronics?
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🔘 Keeping my stuff out of landfills 🗑️
🗳️ Click your choice to see results and speak your mind
What's being done about excess inventory more broadly?
While the luxury sector catches up, other parts of the fashion world are leading the charge in tackling overproduction. Some brands are embracing made-to-order models, producing items only when customers buy them. This reduces waste and can save money in the long run.
Rental and resale platforms are booming, giving new life to pre-loved luxury items. By extending the lifespan of these products, we reduce the need for new ones.
Innovative recycling technologies are emerging to break down unsold textiles and apparel into new products, creating a more circular economy for fashion.
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