After it was report that Wal-Mart and H&M were “quietly” destroying unsold clothes, there was mass outrage on Twitter:
The New York Times contacted the two stores and asked, why? Walmart said it was a mistake, they didn’t know why it had happened; H&M didn’t return calls. At least, that is, until Twitter got wind of the problem. That wind has been blowing for two days, with criticisms running the gamut of limited-character negativity, “unbridled capitalism” to “am thoroughly appalled” to “horrifying!” to “unconscionable in this economy.” (I wonder what would have happened had Twitter existed in the Great Depression? Surely a whole new entry in the thesaurus under “disgusting” would have been required.) (source)
The part in parentheses made my day. What if Twitter had existed when the government destroyed crops and livestocks to prop up prices? What would Twitter’s anti-capitalists have said? The article then follows with this:
After spending a day in the number two “trending” spot in Twitter, H&M called the New York Times. “It will not happen again,” said spokeswoman Nicole Christie. “We are committed 100% to make sure this practice is not happening anywhere else, as it is not our standard practice.”
I guess greedy capitalists do response to the market. If not, then why not continue destroying clothes?
If no one wants to buy clothes then they would have to destroy them wouldn’t they, And it is probably going to save them some money in the process. So if a person throws away clothes its thrifty and a sign that they are not attached to material goods but when a business does it it is a sign of greed.
This is preposterous. Any individual or company should be free to dispose of their private property in any way they see fit. For this company, trashing these clothes was the most efficient way to deal with this problem. Now the company has to expend extra effort and money to see that these end up in the hands of “the needy”, as well as cover their asses on PR. Small as these costs may seem, they will have an impact on the business and the effects of these actions will be felt by the consumer.
Hi Dave. Nice smile. No doubt, market conditions changed and the entrepreneurs have risen to meet the new demands. I was simply flabbergasted by how big a deal people made out of all of this. Reading some of the quotes, you would think they were dumping corpses in the trash. And there is nothing wrong with pointing out the economic consequences of these actions. If this is what the consumers want, that’s their prerogative.
Yes it is… I think the presumption is that they are destroying clothes so that supply goes down and they can charge a higher price for their merchandise…
It can be a perfectly rational business decision. There are costs involved in “giving them away”. To give them away to goodwill or charity is empty rhetoric if one cannot say what other articles should be forgone in order to just “give them away”.
Charity can be good, but if everything was about charity we’d all be dead and there would be no charity to handout.
I doubt it. Brick & mortar stores have an extremely limited amount of shelf and warehouse space. They can’t just stash the overstock in the back room. They’ve got to get rid of it somehow. I think everyone would be happy with them if they recycled the cotton from tees, etc.
“We are destroying these clothes to prop up prices for clothing goods manufactured by poor workers in third world countries. If these clothes are given out for free, clothing prices will be further depressed, which hurts the poor people all over the world who manufacture these clothing items. Wal-Mart would like to join with all other retailers in petitioning the government to establish a floor under clothing prices to ensure that poor third-world workers in the textile industry can receive a living wage. Also, Wal-Mart would like the government to take over the disposal of surplus clothing which exceeds aggregate demand to ensure that this is done in an orderly and fair fashion.”
Nah, Wal-Mart’s new initiative is to hire thousands of new employees for the specific task of liquidating their stock surplus. It’s a Keynesian make-work stimulus! [Y]
Has anyone looked into why Wal-Mart is actually destroying clothes? I know large companies and I know these decisions are never taken lightly. The usual practice is to put unwanted items on sale, sell them for a nominal profit or making no money on them just to clean stocks. In case of clothes what’s left is usually given to firms specialized in this kind of business (we call them raggers around here). They usually pick up the clothes free of charge and then it’s up to them. They usually either ship them to the Third World to be sold at a nominal price or turn them into rags. If Wal-Mart is destroying stocks they must have a very good reason: either local legislation makes it cheaper to dispose of stocks this way or they found some legal loophole to write them off as losses. Wal-Mart employs legions of lawyers and accountants so they know exactly what they are doing.
On the other hand it’s unbelievable the headquarters of snobbishness (NYT etc) are still up to this… [^o)]
Lots and lots of food is still being destroyed in the western world.
Either because it didn’t make it to someones table, because it can’t be sold profitably to enforce price-floor regulations.
Ofc clothes that don’t sell are being destroyed. Who are these retards thinking it is news?
There is no problem with it either except for the owners of the company perhaps who would benefit from better and cheaper methods of calculating demand.
Also they probably think too highly of there own brand. H&M is already clothing for poor people even though they attempt to make people and themselves believe it is designer stuff. So I doubt it would harm there brand if they just relesed the extra stock to second-hand stores.
That Armani don’t want to dump extra stock by having some second-hand store sell it out cheap for charity is perfectly understandable cause it will be damaging to there brand if poor slobs wear it. But freaking H&M is already worn by poor slobs so it would make no difference…
I think the issue is that the clothes could be donated to good will… this logic also applies to armani and friends.
We’re suspicious here… because the implicit claim is that walmart is intentionally destroying clothes to raise the price of clothes for its own benefit. There are many reasons why this must be false. Combined with the previous statement, something fishy must be going on. I smell regulation.
This may well be the case. So what? Since when did Economics become intuitive?
They would only intentionally destroy if they were confident that
They made an entrepreneurial error and overproduced. Production is costly. They wouldn’t intentionally overproduce just so they can destroy later. If they knew better, they wouldn’t have wasted the resources to overproduce.
They think that that the demand response is such that if they destroy a part of their stock, the new [higher prices] X [smaller quantity] would bring in more revenue then [lower prices] X [original quantity], thus, mitigating their losses.
Now, since when are losses more productive for society as a whole? Since when did it become more beneficial to have less wealthy “Capitalists”?
Nah, I doubt there are any regulations. H&M though it is cheap works like a fashion house, they come out with new collections every fall, spring and whatnot.
The simplest way to get rid of whatever is left from the old collection after a discount sell-out in the last week or so is simply to throw it away.
The reason this is happening is not regulations or something fishy it is just the simple fact that store shelf space is a limited and precious commodity and they want to use it for the new and better profit clothing line.
I do however doubt there is really much competition between H&M and second-hand charity clothing stores. They attract different customer segments.
Also it shouldn’t be all that much clothes, they should manage to sell out most of it in there own discout. So in this case it probably doesn’t really matter to H&M if they give it to charity or just destroy it so in this case they might as well give it to charity. Even though they are ofc free to do what they want.
For Wall-Mart I imagine there shit is probably competing with second-hand stores. They could still ship there clothes for charity overseas though, but that is often just harmfull to local textile industries.
And no this logic doesn’t apply to Armani and friends.
People shop at HM because they want new cheap and designed looking clothes. People buy Armani because it is expensive and thus made exclusive.
This is quite different…
For more prestigeus brands I think a strategy of giving away extra stock to second-hand stores could be pretty disastrous. People pay so much for Armani and the likes just because it is excluse, having it on sale in a second-hand store or handed out to tramps will hurt there image quite a lot and destroy the brand.