Published 2 years ago.
About a 5 minute read.
Image: Rodnae Productions/Pexels
For retailers, the logistical challenges of returns are overwhelming. Without circularity in operations, returned items often end up in landfills. But
retailers can take small, immediate steps to set themselves up for becoming more circular — and more successful.
Every year, 5.8 billion — yes, billion — pounds of retail returns and excess
inventory end up in US landfills. If you feel sticker shock looking at that
number, you’re not alone. Consumption and
have driven us to this point; and it’s become clear that we need to find a
viable, long-term solution for mitigating their impacts on the environment.
Before we dive into solutions, it’s important to diagnose why we’re seeing this
level of waste: Consumer behavior has evolved — there is more demand than ever
for ecommerce, which has only increased during the pandemic; consumers buy with
the intent to return portions of every order (we see this especially within
and the retail industry is still trying to get a handle on the carbon footprint
of each item’s journey through supply chains.
For retailers, the logistical challenges of returns are overwhelming.
Oftentimes, returned merchandise cannot be resold as new and quickly becomes
costly to hold in warehouses. Retailers may sell returned inventory in bulk to
liquidators; but much of that inventory doesn’t get resold, or is exported with
little visibility into what happens to those products. Without circularity in
retail business models, returned and excess items often end up in
It’s somewhat of a catch-22 and there’s no one party to blame; but in order to
carve a path forward, we need to fundamentally rethink the value proposition of
retail business models — both in the near and long term.
Unlock customer insights on sustainability & your brand’s unique performance! Submit your brand (or any brand) into the 2024 annual study and receive unparalleled insights on customer perception of that brand’s performance. Benchmark how your customers rate your brand on social and environmental sustainability and overall brand trust, while seeing how your brand compares to others in the study. Space is limited! The deadline to become part of the study is January 15, 2024.
The hard truth is that today, sustainability is seen as more of a marketing play
than an operational issue. It’s not surprising — creating sustainable
infrastructure often conjures up thoughts of having to fundamentally rebuild
businesses from the ground up. And while that may make for the most drastic,
long-lasting effects, retailers can take smaller, immediate steps to set
themselves up for becoming more circular — and more successful.
For instance, retailers can de-silo their sustainability teams and push forward
progress within their supply chains by requiring relevant supply chain and
product teams to share sustainability goals. With a bird’s-eye view of the
entire business, cross-functional groups can identify opportunities to make
procedural changes — whether that’s redesigning packaging, streamlining supply
chains, or pinpointing areas of waste in inventory management — all while
seeking to maintain profitability and revenue figures. Empowering internal
stakeholders whose dedicated focus is to push the business toward more circular
practices can make all the difference and set a company on the right path.
Tactically speaking, two areas where most retailers can, and should, find
opportunities to cut waste are in packaging and return logistics. The amount of
packaging used to ship, transport and sell
is exorbitant today, especially with the acceleration of ecommerce since the
onset of COVID. There are strides being made in packaging design, with
biodegradable and recycled materials rising in popularity — and when implemented
correctly, those switches can provide tangible business
Finding solutions for return
is another way to cut down on supply chain waste. Today, there are a plethora of
options available for retailers to leverage returned merchandise. They can
either choose to invest in establishing their own product refurbishment program,
à la Patagonia's Worn Wear
or The North Face
or work with companies such as
and Renewal Workshop to set up resale programs
to ensure that items don’t go to waste.
Outside of environmental impact, there are a number of benefits that come with
investing in any kind of resale or recycling program. For one, it provides
retailers with another line of inventory, which can unlock access to a new set
of customers while deepening relationships with current ones. Retailers and
brands can also design their business models — and products — to be more
circular by using insights generated from returns and resale data. As these
programs grow, that data can offer insight into the reception of different
designs and launches, ultimately helping them curtail waste at the ideation
Decades from now, retail will look a lot different than it does today. From
logistics to digital optimization, the way that we produce, distribute and
consume goods will be centered around sustainability and
These changes won’t always start with the large, established retailers of today.
Rather, disruption — as it tends to — may sprout from smaller, more agile
businesses that inspire new ways of embedding circular business models and
sustainable practices. This will further shape consumer demand in the mainstream
and help push established retailers to redefine their business
as well. We’re already seeing the beginnings of the consumer shift — according
to a study from McKinsey, 63
of fashion consumers consider a brand’s promotion of sustainability to be an
important purchasing factor.
This is exciting, and something to be hopeful for. For one, we’ll see a lot more
standardization in retail circularity — from repair and recycling programs to
innovations in packaging and network-based supply chains that help mitigate
retail’s carbon footprint.
Digital optimization will also play a critical role in bridging the awareness
gap for consumers. For instance, scannable ID tags — such as the ones created by
— will arm consumers with information on the supply-chain journey, carbon
footprint, care details, and recycling instructions for every item they own. The
more we can leverage these burgeoning technologies, the more we can embed
intentionality in the way that we produce and consume.
It’s easy to look at the issues plaguing retail and see a monolithic,
insurmountable challenge. But there is always hope — innovation and circular
business models will carve a path for retail that enables a more
Published Sep 27, 2021 2pm EDT / 11am PDT / 7pm BST / 8pm CEST