Donated or destroyed? What retailers do with unsold merchandise

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FRANKLIN, Ind. -- Black Friday is about a week away, and shopping carts in stores and online will quickly be filling up.

“People want new, new, new,” said Susan Del Priore, CEO at Magnolia Boutique.

From shoes to shirts, new items hang on the rows and racks at Magnolia Boutique in Franklin. There are even more clothes piled high on the shelves. Items are ready to be shipped.

“We ship from the east coast in Maine to California and Canada,” said Del Priore.

But what happens to the not so new items? Companies can discount items over and over, but some items still just don’t sell.

“Frankly, we just need the space. At some point, the inventory ends up costing you more to keep it,” said Del Priore.

Magnolia Boutique is a husband and wife owned business. Up to 60 boxes of new arrivals are delivered to the warehouse each day. Each month, around 10,000 orders are shipped out to customers.

In fashion, each piece doesn’t have a long-life cycle.

“Typically, after those 90 days, that’s when it’s got to go,” said Del Priore.

Most retailers have stacks upon stacks of leftover clothes, and the space is needed for new inventory.

“The industry in general, the apparel industry, is a fairly dirty industry,” said John Talbott, director for the Center on Education and Research in Retail at Kelley School of Business.

“There’s more clothing being sold than ever before around the world,” said Talbott.

Now more than ever, companies must be careful on what they do with their leftover clothes.

“Still a significant amount ends up either burnt or in a landfill,” said Talbott.

According to a New York Times article from last fall, one of the world’s largest luxury brands, Burberry, burned more than 28 million pounds of clothing and cosmetics. Over the years, many retailers, not only luxury retailers, have been accused of similar practices.

“When there’s millions and millions of people buying millions and millions of garments, some of them unfortunately end up in the landfill,” said Talbott.

Some companies have reportedly burned or deliberately damaged unsold stock to protect their brand. Talbott warns not only is it a huge waste and bad for the environment, but it’s not a good look for retailers. Retailers’ bottom line depends on customers.

“In the world we live in today of transparency, I think all of them are spending more and more time making sure they have a circular supply chain,” said Talbott.

Back at Magnolia Boutique, the company is ending their biggest year yet financially, and with that comes with the biggest amount of unsold merchandise.

“This is probably at least $25-$30,000 at cost,” said Del Priore.

There are two dumpsters just feet away from the packed storage units. The owners promise the excess merchandise is never tossed in the trash, but instead, every piece will be donated.

“For the sheer amount of stuff we have, in my opinion, it’s important to spread the love around a bit,” said Danny Del Priore, CFO at Magnolia Boutique.

Magnolia Boutique focuses on giving back to local churches, senior facilities and other charities.

“It may not be of use to us anymore, but someone can use it,” said Del Priore.

Donations that Magnolia Boutique has seen make a difference over the years. FOX59 reached out to several retailers, luxury to discount and brands in between. No one was willing to share with us what they do with extra stock.

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