Would you throw away brand new clothes? Retailers in Europe are now banned from destroying unsold stock

The European Union has now banned the destruction of unsold clothing. This means fashion brands must find new ways to handle their excess stock, such as reselling or donating items. In order to comply with these regulations, brands must also disclose the amount of unsold stock on their websites. Destruction of garment items is only allowed if they are damaged or unsafe.

These new rules – part of 2024 regulations – aim to make clothing sold in the EU more durable, reusable and recyclable. The rules initially apply to large retailers, but will eventually extend to medium-sized retailers by 2030.

The problem of unsold clothing, also known as "surplus," "deadstock," or "excess inventory," is a significant issue. It includes clothing that was produced but never sold to consumers, as well as items returned by customers. The size of this problem is difficult to determine, as there has been no requirement to report unsold stock.

However, a study analyzing multiple European studies found that unsold stock accounts for an average of 21% of all clothing placed on the market. Some of this unsold stock is given to charities, but the EU estimates that 4%-9% of new clothing is destroyed annually. This number could be even higher for online retailers, due to practices like "bracketing" – where consumers buy multiple sizes of the same garment and return the ones that don't fit.

Fast fashion has exacerbated the problem, with brands like H&M releasing 4,400 styles in 2022 and Zara introducing 6,850 new styles. Ultra-fast fashion company Shein reportedly adds up to 10,000 new designs during peak days. This constant turnover has resulted in thousands of clothes going unsold. Similarly, luxury brand Burberry destroyed £90 million worth of products over five years.

In Australia, we lack reliable estimates of the scale of the problem, but applying EU percentages suggests that at least 3% of all clothing imported into the country remains unsold – equivalent to 47 million units or 11,700 tonnes. If European estimates were applied, this would translate to 62-132 million units of clothing destroyed every year or 15,500-33,000 tonnes.

The consequences of this waste are severe – it represents a significant loss of materials, energy, and labor that went into making and shipping these clothes. So, what can be done about it? Solutions include Australian company Thread Together's efforts to distribute unsold clothing to those in need, and Seamless, an Australian scheme to promote a circular clothing economy by diverting clothing from landfill.

Recommendations include establishing a shared definition of unsold stock, mapping and identifying where and why it accumulates, and providing practical tools to calculate its true business cost. These measures would enhance forecasting and collaboration, helping brands deal with excess stock before it must be discounted, donated or discarded.

By implementing better inventory management and resisting constant style changes, efficiency can be improved. A recent industry report highlighted that Uniqlo increased its profits by 70% over seven years by resisting constant trend turnover, producing only two collections annually and maintaining a relatively limited range.