What actually happens to
Brands are left with huge amounts of unsold products every year, an unsustainable situation both for themselves and for the planet. But will this change in the future?
As sustainability has become an increasingly important topic for fashion consumers, fashion’s waste problem has received more attention. A growing portion of people are aware of how poorly the end-of-life of textiles are managed today; a total of 85% of textiles end up in landfills. However, the focus has naturally been on post-consumer waste, meaning the used clothing consumers dispose of.
Less attention has been given to pre-consumer waste, meaning waste that emerges even before the product is sold. This includes, for example, unsold clothes and deadstock fabric. In 2018, scandals concerning the practice of destroying unsold clothes surfaced and became a subject of debate reaching the headlines. However, the general knowledge of what happens after a product becomes marked as “unsold” is limited.
Fashion’s Overstock Problem
The fashion industry runs on 30-40% of overproduction per season. This can be attributed to many reasons, including difficulties in sales forecasting due to rapidly changing trends, miscalculations, and economics of scale from buying in bulk. Such high portions of overproduction leave brands with huge amounts of unsold clothes they must manage.
So, how do they manage overstock? Brands have different strategies, which vary depending on positioning and business model. However, once a garment is considered “unsold,” it will travel down a hierarchy of clearance options. The overstock strategies vary heavily depending on brand positioning and individual brands. While there is no one-fits-all way of managing unsold products for every company, this is how the journey of a low-end to a soft luxury product could look in the fashion industry.
First, the brands might attempt to sell unsold products through retail or online sales. That is also why brands have relatively standard seasonal sales. At this point, the articles are not yet considered “unsold” since they still have a chance of being sold from their original channel, also called first choice. After this stage, if a product is still unsold when a new season is released, it might be sold in internal employee sales; otherwise, it will be in storage.
Internal & External Outlets
Then, the product often travels through different second-choice channels until it is sold, starting at outlets. Most brands have their own internally owned outlets, run under their brand name, where they sell overstock. These stores are often found in large malls located outside major cities. If an item remains unsold, it will be transported to external outlets, either physical retail stores or online.
Nonetheless, a substantial portion of products remains unsold, even after this stage. This is where they might be sold to destocking and liquidation companies that sell the products for low prices, often abroad.
Another clearance option that can be used hereafter is donations to NGOs and charities. These organizations either receive clothes for free or buy them for a very low price to donate to people in need or resell them in second-hand stores at affordable prices. At this point, brands will receive more or less no monetary value for the clothes but will save storage costs and might even be granted tax cuts in certain countries (France).
Recycling & Upcycling
If the product cannot be donated, it might be recycled or, in some cases upcycled. Recycling is especially a priority for defective goods since they are highly difficult to resell.
If none of these options work out, the last option can be destruction. In 2020 this practice was prohibited in France unless a brand can showcase that all other options were attempted. This is called the AGEC law, and similar legislation was proposed by the EU in March 2022. While it is unknown how much of unsold clothes end up being destroyed, it has been said by French industry representatives to be less than 1%. Regardless, it has been documented as an industry practice across the fashion sector.
Resale, donations, and recycling are the most sustainable options for streamlining surplus stock. These are circular options that reintegrate the clothes into the system. It means that the products are reused, extending their life cycle and replacing the need to create a new piece of clothing and the resources it would take to create it. That being so, FINDS strives to increase the use of these three circular streams to reduce the environmental impact of unsold clothes. Our goal is to divert these clothes from landfills and destruction.
With better visibility and effectiveness in overstock management, brands make better decisions for themselves and the planet. FINDS facilitates the process of overstock clearance by automatically connecting each unsold product to the right reseller, recycler, or charity that can extend its lifecycle through reuse. Our solution gives brands a dedicated platform to collaborate and communicate with their partners on each stock clearance campaign, giving them the overview they need to make more effective decisions.
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