Key Takeaways:
- Despite holiday forecasts predicting a rise in online spending, consumer sentiment remains low. This discrepancy forces retailers to lean into early, “competitive” discounting, highlighting a market driven by inventory management rather than secure, organic demand.
- Across markets, waste is moving from an operational burden to a regulatory liability. Sephora’s $775,000 California settlement over hazardous product disposal and Europe’s new Waste Framework Directive both signal the same shift: waste now carries financial and legal consequences.
- Current industry metrics like revenue growth and inventory turns reward movement and high activity, making them fundamentally incompatible with incentivizing restraint or rewarding waste reduction. Technology that tracks sales and inventory in real-time exists, but the fixed, long-term nature of production schedules means output remains largely disconnected from agile demand forecasts.
Adobe’s latest holiday forecast landed last week. The company expects Americans to spend about $253 billion online this season, around 5 percent more than last year. Bain & Company’s September outlook shows similar growth for total retail, and Mastercard’s analysis predicts a 3.6 percent rise between November and Christmas Eve. Adobe also expects Cyber Week to account for nearly a fifth of online spending and forecasts record mobile sales, driven by early, “competitive” discounting.
Each report looks at a different part of the market, but they all point to the same thing. Sales are expected to rise (in some cases by less than usual, but up is still up), but people don’t feel good about spending. Discounts are appearing earlier: a sign that retailers expect hesitation.
The University of Michigan’s sentiment index, released last week, sits at 55.4, close to its 2022 low. In the UK, GfK’s index has been falling since midsummer. People are telling surveyors they’re worried about jobs and prices. Tariffs are being threatened yet again, and inflation keeps pushing up costs. People are still spending, but the floor beneath them is less secure. Which feels like a bad foundation to be basing assumptions about volume on.
The reality, though, is that the industry can’t slow down, even when shoppers do. Fashion and beauty run on schedules set months ahead. Designers finalise collections sometimes more than a year in advance. Fabric suppliers confirm minimum orders long before the first sample appears. Many factories continue operating through quieter periods, because pausing production means losing time, materials, and skilled workers. At the consumer facing end, marketing campaigns are bought in blocks that assume behavioural patterns based on past prediction. The machine keeps moving because stopping altogether costs more than carrying on.
To combat this, retailers keep running promotions to manage inventory, and off-price outlets expect to take on unsold goods alongside made-for-outlet collections. Activity across the chain remains high because that activity supports revenue and employment. In reporting terms, it still counts as stability, even when it reflects clearance rather than new demand, and even though the result is often waste.
In beauty, waste has already become a compliance problem. Last week, Sephora agreed to pay $775,000 to settle allegations that it illegally disposed of hazardous materials at its California stores. The case was brought by a group of district attorneys after inspections found that expired perfumes, nail polishes, aerosols, and some skincare products (all classed as hazardous once past shelf life) were ending up in general waste instead of approved facilities. California law treats these products as regulated waste that must be stored and shipped through licensed handlers.
Investigators said the violations were procedural rather than intentional. Store employees had been discarding expired products without the required documentation. The settlement requires Sephora to improve staff training, maintain detailed disposal records, and submit to environmental audits. The case showed that poor waste management now falls under compliance law.
In Europe, similar principles are being written into law that has fashion and textiles as a primary target. The EU’s revised Waste Framework Directive, adopted in September this year, introduces extended producer responsibility. It makes brands and retailers financially responsible for collecting, sorting, and recycling the products they sell. The regulation applies to garments, footwear, and accessories, including items sold online.
Under the new system, companies will pay fees into national schemes that fund waste management. The higher a product’s environmental impact, the higher the fee. Fast-fashion firms, whose volumes are high and recyclability low, will pay most. The rules will take effect once member states adopt them, a process expected to take about 30 months. Waste will become a direct cost for brands, and they will have to account for it.
The Directive sits alongside the Ecodesign for Sustainable Products Regulation (ESPR), which from July 2026 will ban large companies from destroying unsold clothing and footwear. France already enforces a similar rule under its AGEC law, and has added an ultra-fast-fashion bill that will apply new taxes (up to €10 per item by 2030) to high-volume platforms such as Shein and Temu. Together, these laws make waste reporting a legal requirement rather than a voluntary practice.
Industry groups have mostly taken a cautious line. Some warn the new EU rules will add costs, others say they were expected and probably overdue. Larger luxury houses are putting money into recycling and circular pilots, while trade associations have asked Brussels for longer transition periods and clearer guidance on how fees will be calculated. The direction is the same either way, accounting for waste is becoming part of the business.
Behind the policy changes is the question of how the industry uses its own data. Many large retailers use software that tracks sales, margins, and inventory in near real time. These systems improve efficiency by automating replenishment and reducing stockouts. They also help shift goods faster through pricing and promotion tools.AI planning software can forecast demand and manage markdowns, yet most production volumes are fixed before those forecasts arrive.
The same logic carries through to how performance is measured: revenue growth, sell-through, and inventory turns all value movement. There are few metrics that reward restraint, so a slowdown shows up as underperformance even when it reduces waste. These two metrics are basically incompatible with one another.
Regulation is beginning to push where the market hasn’t. Fashion still produces more than it sells, discounts what it can, and writes off what’s left. As waste becomes a cost item, those habits are starting to face more scrutiny.
Technology could and indeed should support that shift. The data already exists, production schedules, regional demand, resale rates etc. Using it to limit output would be a real test of progress.
For now, the response is still short term and the industry remains reactive. It manages symptoms through discounts, disposals, and redistribution. Regulation isn’t the cure, but it’s a reminder that optimisation has limits.
The forecasts say this holiday season will be steady. Sales will edge higher, even as shoppers stay cautious. On paper, that looks like stability, but the structure underneath hasn’t changed. Stock will keep moving. Waste will keep building. And the systems that track it all will still be better at measuring activity than restraint.