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Destroying perfectly good retail merchandise

A lot of people are talking about this story, which condemns H&M and Wal-Mart for destroying unsold clothing rather than donating it to a charity or simply throwing it away unharmed to accommodate dumpster-divers.

This shouldn’t surprise anyone who has worked in a retail store.

Many stores have arrangements to return any unsold or outdated merchandise to their suppliers for credit. With this arrangement, the stores take little risk, so suppliers can convince them to stock new or short-lived items. For items of significant value, like electronics, it works as you’d expect: the stores just ship them back.

But many items aren’t worth shipping back, so the stores and suppliers have a wasteful but effective arrangement: the stores simply tell the suppliers how many of each item didn’t sell, the suppliers give the stores credit for them, and the stores must destroy them.

When I worked at Staples briefly in college, we had to destroy most open-box customer returns of inexpensive items, like reams of paper and USB cables, and old versions of software (so many copies of Norton Security Whatevers 2002 when the 2003 versions came out).

“Destroy” doesn’t mean that everything needs to be completely obliterated — it just needs to be damaged enough that it’s not usable. So we’d cut the (perfectly good) USB cables in half, tear a bunch of the pages from the reams of paper, and scratch the software CDs with a box cutter. Then they’d all get thrown away. No part of this was negotiable with the managers. (I tried.)

Have you ever seen a book or magazine that said something along the lines of, “If you received this book without a cover, the author hasn’t been paid for his work”? That’s because book and magazine publishers have a similar arrangement with their vendors, except that the publishers often required in the past (not sure if it’s still true) that the store tear off and send back each credited item’s cover before throwing away the rest.

It’s all incredibly wasteful, but on some level, I can see why they do it: if the “get credit and destroy” system changed to “get credit and donate”, it would really become “get credit, say they were donated, then take them home and sell them on eBay”.

(A lot of retail mechanics are dedicated to reducing theft by their own employees.)

Given that Wal-Mart has a machine dedicated to punching holes in unsold clothing, and they sell nearly everything on consignment and take no risk of unsold stock, they almost certainly have a credit-and-destroy arrangement with the supplier of the clothing in this story.

It’s unfair to criticize these two companies for a practice that’s incredibly common in the entire industry, spanning nearly every product category and nearly every major retailer.

The wastefulness of this is disgusting, but I’m not sure who’s really at fault, if anyone. When you consider the entire story, rather than the narrow view presented by a sensational, low-information New York Times article, it’s hard to come up with a better solution that’s realistic, practical, and economical for the involved parties.