Large fashion groups in the EU have just been banned from destroying clothes and accessories. The regulation was approved back in 2024 as part of efforts to reduce textile waste and overproduction.

Major clothing groups like LVMH, Prada and Chanel will be particularly impacted by this, since destroying clothes has been a regular inventory management tool for them. This ban also comes at a time where a high proportion of luxury clothing is being sold at a discount, reflecting weaker consumer demand and excess stock. It was also recently revealed in a court case that Chanel routinely destroys thousands of unsold products in Hong Kong.

Analysis

The destruction ban is more damaging for the earlier mentioned luxury brands rather than high street fashion brands because luxury brands destroy clothing to create artificial scarcity. It is the scarcity of the luxury clothing that lends this clothing a great deal of its value, justifying its pricing. Coupled with the high levels of discounts the sector is already having to concede, the destruction ban is worsening the underlying problem for these fashion brands, which is that there is weak consumer demand relative to levels of production.

What does this mean for the sector?

• Luxury brands face a fundamental tension between the scarcity premium they sell their products at and compliance with this new destruction ban

• There is a compliance grey area in that these fashion groups may move product destruction outside of the EU to avoid the ban which requires regulatory scrutiny

• Retail stores and secondary market platforms stand to gain from this ban as brands look for compliant methods to get rid of excess stock