09/17/2020

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Luxury Retailers Donate and Recycle Unsold Goods



Dealing With a Supply Glut

The pandemic has rattled the retail industry. Store closures around the world as well as economic downturn have left apparel companies with mountains of unsold merchandise.

In the past, some companies, especially high-end designers, have destroyed unsold goods instead of donating them or selling them at a discount. If a customer pays thousands of dollars for an item only to see it sold at a discount later, companies worry their brands will be harmed. However, this practice has faced criticism from environmental advocates and governments, and many retailers are changing their practices.

A French Law Forbids Destroying Unsold Clothes

In France, where many luxury fashion brands are headquartered, the government passed a law in March requiring companies to donate or recycle unsold clothing rather than destroy it. This is the first law of its kind, but a similar restriction has been proposed for the whole European Union.
This law is impacting companies like LVMH (LVMH) which owns Louis Vuitton, Dior, and other luxury brands. The company has partnered with a specialized recycler called Nordechets in the Loire Valley. At Nordechets’ facility, jewels and precious metals can be easily recovered from clothing. Additionally, products with brand labels, which companies don’t want to donate, can be shredded and turned into insulation or fiber.

Clothing Donations Surge

The law in France combined with the glut of unsold inventory has led to an influx of clothing donations to charities. Good360, a nonprofit which collects unsold clothing, reported that it expects $660 million in donations this year—a 50% increase from last year.

Though retailers are facing unprecedented difficulties, many of their unsold products are going to people who need them, especially during a time of economic downturn.


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