The New Economic Realities Reshaping Retail: Regulation Edition

Brands and retailers today face headwinds that are pulling them in multiple directions. Tariff pressure and economic uncertainty are tightening margins. Liquidation channels deliver just 10 to 20 cents on the dollar on inventory that already exists. Consumer behavior and budgets have shifted, making secondhand the primary shopping channel for a growing share of buyers. And a persistent regulatory backdrop is making the cost of doing business incrementally higher each year.

Most brands are tackling each of these pressures independently.

Resale is one of the few levers that addresses several of these pressures simultaneously. It’s not just a sustainability initiative, but a margin, acquisition, and inventory recovery strategy. 

This article covers the regulatory piece of the broader retail landscape: what's in effect, what's coming, and how brands with resale programs are best positioned to weather the storms. The question now isn’t about whether to respond to new regulations, it’s about how quickly brands can turn compliance into a financial advantage rather than a drag on margins. 

Below are the latest fashion policies in the US and EU, and the ways in which investing in a resale program supports adherence to new regulations and revenue growth.

The Regulatory Landscape

In both the US and EU, new policies are being introduced that make brands responsible for what happens to their products’ end of life. Two key regulatory developments are setting the tone for how unsold and discarded inventory will be managed in the years to come. 

In California, the Responsible Textile Recovery Act (SB 707) is now in its implementation phase, requiring brands to fund systems for collecting, reusing, and recycling textiles. The producer responsibility organization (PRO), which is responsible for developing the SB 707 program, will begin defining program requirements and determining fees required of brands operating in the state this year, with full implementation starting in 2030. States including Washington and New York are considering similar legislation around extended producer responsibility. 

Meanwhile, the European Union will ban the destruction of unsold goods by large companies beginning in July. Companies will also have to disclose volumes of unsold stock discarded using a standardized reporting format starting February 2027. An estimated 4% to 9% of all textile products put on the market in Europe are destroyed before use, meaning that brands will have to find new avenues for addressing huge volumes of excess inventory.

In addition, all EU member countries must have textile EPR laws in place by 2027, which will apply to all brands selling into the EU, not just those based there. 

Financial Accountability

These regulations introduce new costs tied directly to how brands manage excess inventory and their product lifecycle. Noncompliance may face fines, restricted market access, and added pressure on already tight margins.

EPR frameworks like SB 707, introduce eco-modulated fees, which means that what brands pay is directly tied to how sustainable their product lifecycle is. Products that are reused and resold can qualify for reduced fees, while those that aren’t become more expensive to produce and manage. 

In the EU, noncompliance will come with penalties determined by individual member states. Brands that don’t adhere to the destruction ban may face charges across multiple countries, creating a widespread cost burden.

Resale gives brands a way to reduce this exposure while recovering value from existing inventory. Without it, excess product increasingly becomes a cost center rather than a  source of revenue.

Why Resale is a Key Strategy For The New Economic Landscape

Headlines that directly impact retailers aren’t going away. Resale gives brands a way to respond to cost pressures created by new regulations, tariffs, and shifting consumer preferences, making it a key addition to a brand’s operating model. 

1. Reduce exposure to regulatory costs and recover value from existing inventory: Resale turns unsold inventory into revenue, converting what was once an operational cost into a growth engine. At the same time, it keeps products out of landfills, a critical shift as global regulatory frameworks begin attaching significant financial penalties to waste. 
2. Create a more resilient supply model: Branded resale, which relies on domestic supply of secondhand goods rather than products made abroad, protects companies against the cost of tariffs. Rather than pay duties to import apparel and footwear, brands can generate profitable revenue from products that are sitting idle in brand warehouses or customer closets domestically.
3. Hedge against macroeconomic headwinds: Inflation continues to push apparel prices upward, making secondhand options increasingly important for consumers across generations and budgets. About one-third of consumers say they will increase their secondhand purchases to offset price increases, according to ThredUp.
4. Meet shifting consumer demand: Perhaps most importantly, resale is a profitable business unit in its own right, because it monetizes existing inventory and attracts value-driven customers. Resale doesn’t just help brands meet new regulations, it helps them operate smarter, recover value, and build a model designed for where the industry is going next.

Brands across categories are using resale to address excess inventory and create new growth channels. New Balance’s Reconsidered program has recirculated over 100,000 pairs of shoes in just over two years while attracting new customers to the brand.

See what resale could generate for your business. Chat with our team.