The French government announced an end to the destruction of unsold non-food stock earlier this week, calling time on a practice that is common in the luxury retail sector. More than $730 million of returns and unsold inventory are routinely thrown away or destroyed by consumer goods retailers in France, and the practice is widespread in the luxury sector in an effort to maintain label exclusivity. The current value of goods thrown away or destroyed is five times more than those given away.
“A shocking practice”
In a statement on June 4, the French Prime Minister Edouard Philippe outlined plans for a ban that would come into force by 2023, outlawing the destruction of non-food goods including the clothing, accessories, and cosmetics that are mainstays of the luxury industry. Once in force, the plan would see manufacturers obliged to turn the stock over for re-use or recycling, although there will be “concessions” for luxury players, designed to help protect intellectual property.
The move is the first in the world of its kind on a national level and looks set to put an end to a practice the prime minister qualified as “shocking,” as he made the announcement in a CDiscount discount store in Paris. “We can find a viable economic model, make sure that anything unsold is given away… or… broken down for re-use,” he said, ahead of the presentation of a broader anti-waste, pro-circular economy law in July. “We can avoid the destruction of products that are perfectly good, this scandalous waste.”
Luxury’s guilty secret
In luxury, intellectual property is king and the fight against counterfeiting is high-stakes, meaning that labels will go to great lengths to keep their goods out of the hands of unauthorized sellers and copiers. While many big houses are unwilling to comment on where their unsold stock ends up, some have.
Across the channel, British heritage house Burberry lifted the lid on the practice in July 2018, when it announced it would stop burning—albeit “responsibly,” by channeling the energy created back into the manufacturing process—tens of millions of dollars a year of unsold clothes, handbags, and cosmetics, and look to more environmentally friendly alternatives. In recent years, the New York Times has reported on slashed Nike sneakers being thrown out from stores in the U.S., and JC Penney being ordered to destroy overstock Ralph Lauren merchandise to “protect” the brand.
Swiss luxury umbrella Richemont also came clean last year, when it admitted buying back and destroying $560 million of top-end timepieces by Cartier, Piaget and Vacheron Constantin in two years, rather than have them appear on the resale market. While some are destroyed, many unsold watches are dismantled and recycled, with precious stones removed for re-use and metals melted down for new pieces. It’s this kind of practice the French law hopes to encourage.
Towards zero waste?
As social and environmental responsibility becomes increasingly difficult to avoid, Green parties across the region in last month’s European elections saw an increase in support that put sustainability even more firmly on the political agenda. With an eye on the Green vote, the Macron government already promised to tighten up laws regarding waste in January, after a voter outcry in response to a French television documentary showing online retailer Amazon destroying products returned by consumers on behalf of vendors who cannot pay to warehouse their stock.
Up until now, many brands have born the environmental and ethical cost of incinerating or shredding unsold stock, often offshore, rather than having it end up in a discount store or on the “gray market.” But with elections coming up in several countries in Europe, and a voter groundswell towards more responsible policies, the French ban could herald the start of an enforced change in attitude in a region that represents the heartland of the luxury industry.
