Why destroying products is still an “Everest of a problem” for fashion
American luxury brand Coach spent the last week scrambling to contain a backlash over allegations of destroying products and unsold inventory after a viral Tiktok video showed a steady stream of handbags that had been slashed across the front.
Coach says the video is inaccurate and misleading and has pledged to eliminate product destruction “wherever possible”. Global head of digital and sustainability Joon Silverstein says that Coach has been working actively to avoid the practice, which is an ongoing problem for the wider fashion industry. She says most unsold products are donated, and only damaged items are destroyed. “Finished goods destruction is a very common industry practice, though of course that does not make it right. I can’t speak for other brands, but one of Coach’s goals has been zero destruction and that is what we’re striving for,” she says.
Coach is in the public hotseat, but it’s far from the only brand that destroys excess stock. “It’s way bigger than Coach. They’re the current company that is receiving the negative publicity, but it’s so widespread,” says Anna Sacks, the waste reduction and diversion expert whose video on Tiktok sparked the outrage.
In an industry that has only recently begun to incorporate environmental impacts into its business decisions, the practice of destroying unused products has long been a norm for brands. For luxury brands, destroying unsold products also ensures brand value is retained. It is also often cheaper, and legal in the US, to destroy excess product rather than spend resources finding ways to repurpose or recycle it. Policymakers in some countries, including France, have started trying to create frameworks for responsible management of discarded clothing and other waste streams.
Burberry faced criticism in 2018 when reports emerged that it was burning unsold inventory, and it quickly committed to not destroying any unsellable products. In truth, all brands have unsellable products to deal with, whether it’s unsold inventory, damaged goods or customer returns — and the industry has not yet created enough solutions for dealing with them effectively.
The problem has been exacerbated by an increase in product returns tied to the rise of online sales. Returned items can be tricky to resell because many businesses are not equipped with the necessary infrastructure or technological capacity — they can easily end up as discards. The overall return rate for online shopping across industries is 25 per cent, according to Optoro, a reverse logistics company that works with retailers and manufacturers to manage and resell returned and excess inventory. For fashion companies, it’s between 30 and 50 per cent.
“Do I think that there’s a sizable problem there? I think there’s an Everest of a problem,” says Raffy Kassardjian, founder and CEO of Parker Lane Group, which works with brands to manage their excess inventory through its own resale and recycling channels and is rolling out a direct-to-consumer platform for its luxury partnerships.
In the spotlight
The problem is multi-pronged. In some cases, when goods can’t be sold, there’s nowhere for them to go. In fashion, most products have not been made with disassembly in mind, which means their parts cannot be repurposed into other products, and the industry’s capacity for high-quality recycling remains extremely limited. Experts say it’s also impossible to fix the problem without addressing the root cause of overproduction, which Sacks says is fuelled by brands’ need to report continuous sales growth and is the underlying motivation behind her social media campaigns. “Fundamentally, we need to be measuring what success looks like in a different way,” she says.
Coach says it donates the “vast majority” of its unsold inventory, although it did not specify a percentage, only a dollar value: over $55 million in fiscal 2021. Products that Coach says it continued to destroy — until last week — were in-store returns that were too damaged, defective or for other reasons couldn’t be sold or donated.
Silverstein points out that many organisations will not accept donations of damaged goods. In recent months, Goodwill thrift stores in the US have had such an influx of unusable things that the increased trash expenses have diverted money from other services. There are also global ramifications as to how charities manage their donations. “Donation is not a catchall solution,” says Silverstein. “All brands would have done this a long time ago if it were as simple as just donating all items.”
In April, Coach launched (Re)Loved, a programme for product trade-in and resale that offers some product repairs. According to the company, 40 per cent of US stores are sending damaged or defective products for repair and resale or recycling through (Re)Loved, and it is on track to expand further.
The furore over the video last week has accelerated those plans. “We had already been planning to eliminate this last mile by spring, and to expand [the reach of (Re)Loved] to all stores as our workshop capacity increased. When this video came out, this is where we were on our journey in our goal of achieving zero destruction,” says Silverstein. Parent company Tapestry, which also owns Kate Spade and Stuart Weitzman, declined an interview, saying only Coach is commenting.
For Burberry, the path to eliminating product destruction since 2018 has included donating products and raw materials to places like design schools and charities; launching dedicated aftercare spaces in London and Paris stores; expanding repair and replacement services; and piloting a service for leather conditioning to extend product life.
However, there are other gaps that these relatively straightforward efforts do not address. Burberry said it has also trained colleagues on circular design principles, held product disassembly workshops and funded research by the Hong Kong Research Institute of Textile and Apparel to design a recycling system for post-consumer leather goods. (The fashion industry has been slow to invest in and adopt recycling technologies and infrastructure for textiles in general, and for leather in particular.)
Similarly, Coach’s ability to expand the (Re)Loved programme has been limited by the talent available to operate it, says Silverstein. To fill that pipeline and as part of an accelerated plan in response to the video released last week, Coach says it’s launching a craftsperson apprenticeship programme to help rebuild craftsmanship capacity in the US.
“This talent is critical to our ability to repair, repurpose and recycle this product,” says Silverstein. “We are dedicated to finding and innovating scalable solutions to the challenge of waste in the fashion industry, and we are focused on doing it in a really intentional and thoughtful way.”
In the Tiktok video, Sacks says that Coach was claiming a tax credit for destroyed products, a statement that Coach says is patently false. Silverstein did not have answers to specific questions about how they report product destruction for tax purposes, but was adamant that Coach does not benefit financially from the practice — and said donations can be a writeoff as well.
Industrywide, experts are clear that it is often the case that it makes more financial sense for brands to destroy rather than resell, repair or recycle unused goods. The US law doesn’t require brands to disclose whether goods were destroyed intentionally or accidentally.
Julie Zerbo, founder of The Fashion Law, has written about specific examples, from US customs to Italy, “where brands that destroy unsold products can claim tax credits as a result”. In France, by 2023 it will be illegal to destroy unsold goods, an anti-waste law that Susan Scafidi, founder of the Fashion Law Institute, says is “groundbreaking”. “I’m not sure I’d characterise this [tax deduction strategy] as a [legal] loophole, it’s just the way that import duties are structured in the US,” says Scafidi.
Sacks is in the process of setting up the Donate Don’t Dump coalition, which is aimed at changing US federal tax regulations to match something similar to France’s anti-waste laws — although policy experts worry that landfill bans, if not accompanied by comprehensive solutions for how companies deal with their waste instead, ultimately mean that items get dumped somewhere else instead.
Destroying excess products is often simply the least expensive option. “Sometimes that’s our biggest competition — the cheapness of just burning it,” says Optoro co-founder and CEO Tobin Moore. However, the risks associated with destroying excess inventory could eventually lead to legal problems, says Mary Heaney, editorial director at the Luxury Law Alliance. “Some ‘shareholder activists’ are monitoring the claims on sustainability made by some companies,” she says.
Longer term, in addition to the direct implications for the planet, a brand’s reputation is ultimately also at stake. Ironically, that was once the reason brands may have destroyed products in the first place — to retain control over where products end up and preserve the scarcity model of luxury.
Now the tables are turning, says NYU and Cardozo fashion law professor Douglas Hand. “There’s nothing more trademark-dilutive than getting caught lying and taking a position publicly that you’re not practicing.”