Rethinking Recirculation for Retailers

The past few years have seen circular models become increasingly popular among brands looking to revamp their sustainability programs. These models encourage organizations to take control of their supply chains from start to finish, assuming that products will eventually be returned to the company for recycling or reuse. The idea is that, by planning ahead for the entire product life cycle, these companies can mitigate environmental impact and keep their goods out of landfills, oceans, and city streets.

It's an effective approach, and countries across Latin America are embracing it at scale, and the model has the potential to help Latin America reduce its impact. The region, which generates 160 million tons of solid waste per year, recycles less than 3% of this total. When applied successfully, circularity can improve businesses’ environmental performance, customer satisfaction and bottom lines. However, traditional retailers face unique challenges when integrating circular principles into their operations. 

Circularity Challenges

The circular model that has become most popular of late is relatively simple (to understand, not to execute). Most prioritize continued brand “ownership” of products, opting to encourage trade-ins, offer maintenance throughout product lifespans, or establish owned-and-operated recycling channels. 

While longer lifespans alone can help mitigate waste, there’s another sustainability benefit to the practice. Disposal is now the brand’s problem, which drives more careful material sourcing, production and product development practices throughout the entire process. It’s a virtuous cycle that drives continuous improvement, and it’s no wonder retailers want in on the benefits.

The problem for traditional retailers is that this version of the circular model was developed for direct-to-consumer (DTC) brands — those that design, produce and sell their own products. The majority of retailers with operations big enough to feel the benefits of a circular approach are, primarily, resellers of products made by other companies. They do not have control over the materials used in their products’ manufacturing, the expertise to offer maintenance, or the authority to allow trade-in programs at scale.

It is possible for these businesses to implement some circular programs that follow the “classic” circular model. They may be able to build in-house brands around recycled materials, offering discounts to customers who return items for recycling and reuse rather than discarding them. Others may choose to refurbish and resell items produced by other brands. Many specialty electronics retailers will buy used items from their customers and repair them for discounted resale. However, managing separate programs of this nature for all the merchandise available at a big box store, for example, is often out of the question. 

The approach was simply not built with traditional retail businesses in mind, but that doesn’t mean its principles cannot be applied in new ways to improve operations. 

A New Point of View

To reinvent circularity for brick-and-mortar retail, leaders need to step away from the specifics and examine the spirit of the approach. The goal is to reduce waste, make items last longer and think more critically about sourcing. There are ways to do all those things without implementing consumer-facing circular initiatives. In fact, most often, the first step to embracing circularity — for brick-and-mortar retailers — means participating in a program, not running it. 

For example, one of the biggest applications of single-use plastics in retail is in the hard tags used to protect merchandise. Consider the sheer number of individual units on a given sales floor at any time. For a big box store, the number might be in the millions. If even a quarter of those items are tagged for electronic article surveillance, that might mean 250,000 single-use tags discarded every time stock turns over.

By partnering with tech vendors that offer recirculation and source-tagging services, retailers can do their part to minimize waste, lower emissions, and save time and money. Programs like these can save millions of dollars of plastic waste and billions of tags from landfills.

Retailers can also participate in circular economies by collaborating with DTC brands and manufacturers that have established their own programs. With store-in-store partnerships growing in popularity and driving sales for both traditional and DTC retailers, leaders are already considering these kinds of strategic alliances.

By prioritizing brands with existing infrastructure to support sustainable, circular models, retailers can help build up these programs and demonstrate their commitment to responsible practices to shoppers. For example, store-in-store displays can do double-duty as drop-off points for used products, which can be shipped back to the brand via existing transportation routes. Not only does this draw new customers into retail locations but it minimizes the emissions associated with shipped returns by consolidating shipments. 

Of course, these are just two examples that might help retailers get started with circular models. There are countless ways for retailers to apply the principles of circular initiatives to their internal operations and extend the benefits to their customers — without becoming circular businesses themselves. 

Challenge Accepted

The details of how, where, and with what a product is made are increasingly guiding consumer decisions. Shoppers have sent a clear message that they recognize the importance of doing their part for the planet, and they are challenging the brands they patronize to do the same. 

Rising to the moment doesn’t have to be challenging, though. The secret is that small changes in how decisions are made can bring sustainable operations within reach, and they don’t always have to come with end-to-end changes or a high price tag. Sometimes, it just takes creative thinking about what you’re already doing and a willingness to try something different.