At minimum, any medium business will be tracking disposal costs in its accounting books; the EU rule effectively taxes disposal by imposing regulatory processes upon it, so the net cost of disposal will increase to reflect the paper trail costs. The phased-in ‘large first, medium next’ started a while ago, giving mediums about twice as long (iirc?) to prepare for compliance as larges. One of the more predictable outcomes is that retailers will need to inspect and classify their completed-product waste streams, rather than simply dump every return bucket into the trash. Retailers are expected to do everything in their power to reduce the total volume of material inspected in order to increase profits, which in concert with stricter return regulations already in place, will force them to do various things.

Small retailers that process returns by taking the item out of the envelope, studying it, and then putting it back up for sale (either at full or reduced price, depending on new or cosmetic defect) will be entirely unaffected because their production costs vastly exceed their return inspection costs and they’ve been recording ‘sellable’ vs ‘worn’ vs ‘cosmetic defect’ somewhere this whole time anyways (or else they’d collapse even without these regulations!), and medium businesses will likely find their profits temporarily reduced — but since they were disposing of sellable products to begin with, they can either sell them to recover profits, donate them to reduce taxes, or accept the fractional inspection charge against profits and continue as-is.

Some possibilities: Reduce production defects (slower production/qa times), return rate), Reduce size variability (slower production/qa times), Improve fabric quality (higher production costs, lower future sales), Provide more detailed sizing charts (higher sales cost, lower return rates), Provide more consistent sizing (eg. band size 85 is not 80-90cm between different models and different brands), Reduce production batch sizes (less waste, more shipping costs), Reduce overseas manufacturing (higher cost production, lower cost/time shipping), Sell entire batches until sold out (increased inventory costs, maintains brand wealth-image), Donate wearable clothing to charity (tax deductions, goodwill), Switch from overseas large-batch production to domestic JIT (reduces inventory of never-sold products to zero), and so on.