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Why H&M wants your old clothes

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H&M wants your old clothes. And it plans to pay (in store credit).

The Swedish clothing retailer doesn't even care if you bring them a bag full of torn Gap sweatshirts from the 90s, you'll get the discount -- £5 per bag of old clothes if you're in Britain and 15 percent off if you live in the United States, with a limit of two discount vouchers a day -- and the company will recycle the clothes.

H&M's garment collection program started earlier this year in selected stores and they plan to expand to it all of their 2,900 outlets around the world. According to the company, it will the first to collect garments worldwide.

So what's the incentive for H&M to start a project like this? As Bloomberg Businessweek points out, it's a push to help customers feel better about shopping there since the company has more of its clothes made in Bangladesh than any other company (H&M did sign a legally-binding accord on fire and building safety in Bangladesh). But it could also help bring in more business:

H&M also sells the castoff clothes, subsidizing the discount further. Say a London customer donates a bag and then buys £40 worth of skinny jeans and H&M’s David Beckham-brand underwear. If the retailer sells the used clothes for just £1, it has conceded just £4 overall—a 10 percent discount, effectively—and is probably still in the black.

So while H&M says it won't profit directly from the old clothes, there are good business reasons for running the program. And that could be a boost to the company which has seen its sales growth fall over the last six months.

The Brilliant Business Model Behind H&M's Clothes Recycling Plan [Bloomberg Businessweek]

Photo: Flickr/chicgeekuk

— By on June 25, 2013, 11:27 PM PST

Tyler Falk

Contributing Editor

Tyler Falk freelance journalist based in Washington, D.C. Previously, he was with Smart Growth America and Grist. He holds a degree from Goshen College. Follow him on Twitter. Disclosure