How to Leverage Excess Inventory to Create a More Sustainable Brand

In recent years, brands have taken a more active approach to their own sustainability. Many brands now feature initiatives in-store to encourage customers to recycle old or unwanted clothing while others have committed to sourcing materials for products from more sustainable sources.

However, shockingly, the past few years have also seen many known brands destroying excess inventory in perfectly usable condition. Excess inventory can happen for a number of reasons—including cancelled orders, unexpected lack of product demand, overproduction, manufacturing faults and many other factors. Instead of finding a sustainable way to alleviate the burden of excess inventory, items are often burned or thrown away. Research from 2017 carried out by the Ellen MacArthur Foundation found that the fashion industry is responsible for creating greenhouse gas emissions of 1.2 billion tons per year, with much of this being the result of disposed excess inventory. Clearly, this practice not only wastes products and resources, but is extremely detrimental to the environment.

So, why exactly are brands doing this? Well, this widespread method of disposing excess inventory is often carried out with the intention of protecting the brand’s value and reputation. In short: an item’s worth and exclusivity are undermined when it’s donated or sold at a lower price, making the brand overall less desirable to paying customers.

However, processes like incinerating excess inventory actually seem to demonstrate a brand’s lack of respect for their own products, serving only to waste the time and resources spent towards producing items. With this generation of consumers being much more ethically and environmentally conscious, disposing inventory has instead proven to be damaging to a brand’s profile. By putting money towards inventory disposal, retailers are not only undermining the value of their own stock, but also missing an opportunity to recover some of the funds tied up in these items.

Despite improvements in forecasting and product planning, excess inventory continues to be an unavoidable issue for brands, but opportunities exist to find better solutions. So, how can brands leverage their burdensome excess inventory to create a more sustainable brand?

1. Sell Excess Inventory Through Off-Price Channels

Brands that are unable to sell all of their inventory at full-price can sell their excess product to off-price retailers at a discounted rate. Selling excess inventory enables brands to be more sustainable in a number of ways:

  • Improve cash flow – Brands have the opportunity to liquidate funds that would otherwise be lost through disposing usable goods. The off-price market is estimated to be worth $1.5 trillion globally, with apparel, footwear and accessories alone representing a $250 billion opportunity.
  • Prevent wasteful disposal – According to a recent study by the Circular Fibres Initiative, for every second, the equivalent of one garbage truck of textiles is landfilled or burned. This is extremely harmful to the environment, with many clothing items featuring non-biodegradable components. By selling excess inventory, brands can reduce the risk of wasteful inventory disposal.
  • Increase clothing utilization – Brands can increase a product’s lifecycle and promote the recycling of items to ensure that products continue to be used for their intended purpose.

Selling products to off-price retailers promotes sustainability within retail by ensuring that inventory is sold rather than destroyed. Off-price also presents brands with a mutually beneficial solution by enabling them to transform their excess inventory into another channel for revenue.

2. Donate Excess Inventory for a Good Cause

For those who can’t sell, there are still other sustainable ways to alleviate the burden of excess stock. A number of nonprofit organizations such as Delivering Good exist for this purpose, helping bridge the gap between retailers, manufacturers and individuals in need. Charities like this empower retailers to donate excess inventory to people affected by poverty and tragedy.

This straightforward yet effective solution benefits brands by taking excess inventory off their hands, while more importantly helping those in dire need. Delivering essential items ranging from clothing to goods and supplies such as towels or bedding, charitable organizations are integral to helping companies harness their excess inventory to operate more sustainably.

A Win-Win Situation

With brands under increasing pressure to be more environmentally conscious, sustainability has become crucial for brands that want to uphold their image and reputation.

Destroying and disposing inventory not only puts a brand’s reputation at risk, but also prevents the brand from generating additional profits from underperforming stock. From both an environmental and financial perspective, leveraging excess inventory is a win-win situation.