Some retailers destroy unsold clothing rather than discount it

Not surprisingly, a lot of high end clothing goes unsold during an economic downturn. Well it seems that some would rather destroy it than sell it cheaply:

In the bitter cold on Monday night, a man and woman picked apart a pyramid of clear trash bags, the discards of the HM clothing store that reigns in blazing plate-glass glory on 34th Street, just east of Sixth Avenue in Manhattan.

At the back entrance on 35th Street, awaiting trash haulers, were bags of garments that appear to have never been worn. And to make sure that they never would be worn or sold, someone had slashed most of them with box cutters or razors, a familiar sight outside H & M’s back door. The man and woman were there to salvage what had not been destroyed.

He worked quickly, never uttering a word. A bag was opened and eyed, and if it held something of promise, was tossed at the feet of the woman. She said her name was Pepa.

Were the clothes usually cut up before they were thrown out?

“A veces,” she said in Spanish. Sometimes.

From the New York Times, via LargoWinch in this iTulip thread. Since the first article, that particular chain has announced that they won't be doing it anymore, presumably because the optics of this are really bad.

At first blush, one might think the economics of it are bad too. Why not simply sell the clothing at a discount? There is a good reason for this, of course, well summarized by Milton Kuo in the same thread:

Being that the clothes being destroyed are "brand-name," selling the goods at a deep discount cannot be allowed since that gives buyers insight into the actual cost of the good. Selling the goods at-cost or at an extreme discount to MSRP could condition customers to reject the prices typically paid.

Makes sense on a certain cynical level, though apparently in Singapore they just remove the labels before discounting them, which seems a better solution to me.