The afterlife of unsold merchandise

| March 20, 2014

What happens to merchandise that retailers aren’t able to sell? That’s the question that a listener posed to Marketplace, and Marketplace reporter Sabri Ben-Achour took on the challenge of uncovering the answer.

As it turns out, the answer is that there is no clear answer. Strategies vary by industry, retailer, and product. Many retailers start with temporary sales to try to burn through a lot of product in a short amount of time.

Then there are the discounts. Mark Barratt, a teacher of supply chain management and operations at Marquette University, told Marketplace: “Target has a pretty clear schedule of how long the product is sitting on the shelf before it gets discounted,” and can work its way up to a 70 percent price reduction.

Some clothing manufactures opt to send leftover merchandise to discount stores like T.J. Maxx. From Paulo Ordoveza.

Some clothing manufactures opt to send leftover merchandise to discount stores like T.J. Maxx. From Paulo Ordoveza.

If that still doesn’t move enough product, retailers face a choice. Most choose to donate the product, sell it to a discount retailer such as T.J. Maxx, or liquidate it.

However, those aren’t straightforward solutions. Many retail executives are reluctant to see their products end up for sale elsewhere at pennies on the dollar – especially if those products are easily identifiable as being from the original retailer. In essence, it cheapens the brand and sends the message that people shouldn’t bother paying full price when they can simply wait and find the same products elsewhere for much less.

In order to circumvent this problem, it’s common for retailers to simply choose to destroy the product rather than risk damaging the brand. “That may be part of the reason nearly 21 billion pounds of textiles end up in landfills each year,” reports Ben-Achour.

To be fair, consumers contribute an alarming percentage of that annual volume of textile waste (as we’ve discussed previously in this blog), but one thing everyone can agree on: Preventing excess inventory levels is easier than dealing with excess inventory once it’s already on the shelves. Many retailers have analysts whose entire job is to focus on a category of products, anticipate peaks and valleys in the sales cycle, and manage inventory levels so they have enough to satisfy demand but don’t have too much.

Unfortunately, the market can be unpredictable and even the best inventory analysts make errors.  If a retailer suddenly ends up with 30,000 extra holiday sweaters and doesn’t want them to end up in a thrift store, those sweaters might be headed for a landfill — unless the retailer is willing to explore recycling. (We’ve written about textile recycling before, and we’re sure those sweaters could make excellent carpet padding after a bit of work!)

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Category: Recycling programs

About the Author ()

Ellen Hunter Gans has been writing for RecycleReminders since the blog’s inception. She is passionate about words, new media and, of course, recycling.

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