Why do mall stores sell clothes that nobody buys?

Mall stores often display racks of clothes that seem to go untouched. Why do these items end up as shelf-warmers, and what happens to them?

Mall stores sell clothes that nobody buys due to overproduction, incorrect trend forecasting, and inventory mismanagement. These unsold items are eventually discounted, donated, recycled, or destroyed.

Let’s explore the journey of unsold clothing, from markdowns to waste, and why some brands resort to drastic measures like burning inventory.

What happens to all the unsold clothes?

Unsold clothes don’t simply vanish—they go through various processes depending on the store and brand. But what actually happens?

Unsold clothes are often discounted, sent to outlet stores, donated to charities, recycled, or destroyed. The path depends on the retailer's policies and sustainability goals.

Luxury walk-in closet

Common practices for unsold clothes:

1. Clearance sales: Items are heavily discounted to attract buyers and clear inventory.
2. Outlet stores: Brands send unsold stock to outlets where customers expect lower prices.
3. Donations: Charities like Goodwill and The Salvation Army receive unsold clothing from many retailers ¹.

Increasing focus on sustainability:

Brands like H&M have implemented recycling programs, turning old or unsold garments into new products to reduce waste.

What do stores do with clothes they don't sell?

Managing unsold inventory is a logistical challenge for stores. What strategies do they use to handle excess stock?

Stores handle unsold clothes by slashing prices, liquidating inventory, or partnering with recycling programs. Some high-end brands destroy stock to maintain exclusivity.

Methods of handling unsold clothes:

1. Liquidation: Retailers sell bulk inventory to third-party companies, which resell items at steep discounts.
2. Recycling: Retailers like Zara and Levi’s recycle unsold items to reduce environmental impact.
3. Destruction: To prevent brand dilution, some luxury brands destroy unsold goods rather than discounting them.

Why destruction happens:

Destroying unsold clothes protects brand image, especially for luxury labels that rely on exclusivity. However, this practice faces increasing criticism for its environmental harm.

Why do brands burn their unsold clothes?

The practice of burning unsold clothes seems extreme, but some brands see it as a necessary strategy. Why do they do it?

Brands burn unsold clothes to protect intellectual property, maintain exclusivity, and prevent counterfeit resale. This is common among luxury brands like Burberry.

Burning fabric under the stars

The rationale behind burning inventory:

1. Brand exclusivity: High-end labels avoid flooding the market with discounted items, which could dilute their perceived value.
2. Counterfeit concerns: Destroying stock ensures unsold items don’t fall into the hands of counterfeiters.
3. Tax benefits: In some countries, companies receive tax breaks for destroying unsold inventory.

Public backlash and alternatives:

Environmental groups and consumers have criticized these practices. Some brands now focus on resale or recycling as eco-friendly solutions.

What does Walmart do with unsold merchandise?

As one of the largest retailers in the world, Walmart generates significant unsold inventory. What happens to it?

Walmart³ handles unsold merchandise by discounting it, returning it to suppliers, or donating it to charities like Good360. Ineligible items are liquidated or recycled⁴.

Key processes at Walmart:

1. Discounting: Unsold items are marked down multiple times before reaching clearance shelves.
2. Supplier returns: Vendors often take back unsold goods under specific agreements.
3. Charitable donations: Walmart collaborates with nonprofits to redistribute unsold but usable products.

Innovations in waste management:

Walmart has also introduced sustainability initiatives, including recycling and repurposing unsold merchandise to minimize environmental impact.

What does Forever 21 do with unsold clothes?

Fast fashion brands like Forever 21 deal with massive amounts of unsold inventory. How do they manage it?

Forever 21⁵ handles unsold clothes by running clearance sales, donating to nonprofits, or selling excess inventory to discount retailers and liquidation companies.

Fast fashion’s approach to excess stock:

1. Clearance events: End-of-season sales help move large volumes of inventory.
2. Liquidation: Unsold stock is sold in bulk to resellers, who offer it at steep discounts.
3. Donations: Partner organizations distribute unsold clothing to communities in need.

Challenges in fast fashion:

The rapid production cycles of brands like Forever 21 create excessive inventory. While discounting and liquidation address short-term issues, these practices raise concerns about sustainability.

Conclusion

Mall stores often face the challenge of unsold clothes due to overproduction and trend shifts. While some retailers discount or donate, others resort to destruction. Increasingly, sustainable practices are becoming the preferred solution for handling excess inventory.