Retailers close the loop on creating a circular retail economy

The industry is making significant investments to build tools and business models to power future circular solutions
VP, CSR & Sustainability; Executive Director, Center for Retail Sustainability

The future of retail is circular. A circular economy, according to the Ellen MacArthur Foundation, requires eliminating waste and pollution, regenerating nature, and keeping products and materials circulating through the economy at their highest and best use. It means reusing, repairing, repurposing and reselling products multiple times and recycling them into their component parts when they are no longer useful. It means redesigning products to be more durable and made from recycled and other environmentally preferable materials that are easily recycled or composted when they are no longer useful.

Like the early days of the internet and ecommerce, the early tools and business models that will power the circular economy are still being created. They are discussed in meetings like the invitation-only NRF Circularity Workshop for retail executives held during NRF 2024: Retail’s Big Show, at Reverse Logistics Association events, in a recent two-day Ikea “One Home, One Planet” meeting and in other ongoing conversations. Retailers are busy building their part of the circular economy.

The two aspects of the circular economy most familiar to U.S. consumers are resale (buying and selling used products) and recycling, described in greater detail below. Other circular retail practices include redesigning products to be more durable, selling more sustainable products, offering repair and refurbishing services, integrating refillable and reusable product packaging and renting products rather than selling them.

Reverse logistics: The backbone of the circular economy

Everything that happens after a consumer buys a product is an aspect of reverse logistics. The reverse logistics industry manages how returned products are evaluated, repaired or refurbished, repackaged, resold, donated, reused or recycled. Members of the Reverse Logistics Association create financially viable ways to ensure products that are no longer wanted retain their useful value, either as products to be used by others or as materials that can be recycled and made into new products. NRF acquired the RLA in September 2023.

Product resale

Eileen Fisher launched its resale program in 2009, selling gently worn Eileen Fisher products on its website. Patagonia, which had been selling select used products in-store even earlier, launched its online Worn Wear resale program in 2017. There are now around 160 fashion brands selling slightly worn or “previously loved” products including brands like Neiman Marcus, Coach and Levi Strauss & Co. Three dozen brands launched resale programs in 2023, including American Eagle, H&M, J.Crew and Kate Spade.

Resale retail is now one of the fastest growing segments of the retail industry. ThredUp’s 2024 Resale Report shows secondhand apparel sales growing 15 times faster than the broader retail clothing sector. It estimates that secondhand apparel sales were $197 billion in 2023 and projects that they will hit $350 billion by 2028.

Resale is not limited to apparel. Some Ikea locations now buy back used Ikea furniture for resale at Ikea stores. Retailers like Staples, Walmart and Target offer gift cards or store credit in exchange for returning select electronics to the store or through online programs. Returned electronics are evaluated for potential refurbishment, repackaging and resale or proper recycling.

There are franchise retailers that specialize in buying and reselling gently used products, including Once Upon a Child, Plato’s Closet and Play It Again Sports. Half Price Books has been selling used books, music and collectibles since 1972. Nonprofit organizations like Goodwill have been selling donated products to create jobs, provide job training and make more affordable products available to those in need for more than 100 years.

The world’s largest retailers are currently scaling their resale programs. Both Walmart and Amazon sell a wide variety of used products online. At Walmart Restored, consumers can buy refurbished televisions, computers, phones and other restored electronics items and both large and small appliances including refrigerators, vacuum cleaners and outdoor equipment. Products come with a 90-day return option and at least a one-year warrantee. Walmart also has a dedicated portion of its website for pre-owned clothing and fashion accessories, including bags, jewelry and watches.

Amazon sells new, used and reconditioned products. Amazon Renewed sells products that have been professionally inspected, tested and cleaned by Amazon-qualified suppliers. The Amazon Devices Pre-Owned program refurbishes and sells Amazon devices like Kindles, Fire televisions and tablets, Ring video doorbells, Echo and Alexa products. Products sold through Amazon Renewed are tested for quality and graded for aesthetics as premium, excellent, good or acceptable. Products come with a 90-day guarantee and additional warrantees depending on the product.

A similar program, Amazon Warehouse, sells an even wider variety of products that were returned by consumers, including furniture, baby products, outdoor grills, automotive products, camping equipment, pet supplies, and grocery products. The products are inspected and graded and can be returned within 30 days. The company also sells “pre-loved” designer bags and accessories on the Amazon Shopbop site.

Product recycling

Staples makes it easy for consumers to recycle more than 50 categories of office equipment and office supplies for free at every Staples location. It built a sophisticated reverse logistics system with a variety of partners that allows it to recycle products like computers, ink cartridges, keyboards, batteries, coffeemakers, flash drives, old pens and more. Staples even recycles used crayons through a program with The Crayon Initiative that sorts them by color, melts them into new crayons and distributes them to art programs at children’s hospitals. Staples Easy Rewards members earn points for recycling that generate savings and other benefits. Amazon collaborated with Staples to help its customers recycle small consumer electronics for free.

Consumers at most Best Buy stores can recycle up to three items per household per day, including televisions, computers, video game consoles, appliances, vacuum cleaners, hair dryers and curling irons. Many products can be recycled for free in-store, although some products require a per-item fee. Best Buy will pick up bulky items for a small haul-away fee for consumers that purchase replacement products at Best Buy or for a higher fee without a purchase. The list of products it will recycle and state-specific recycling information is available on the Best Buy website.

Other retailers also offer recycling programs. H&M has been collecting clothes from any brand at its stores since 2013. Wearable clothes are marketed as secondhand clothing. Others are turned into new products or recycled so the fibers can be used to make new products.

Many retailers collect plastic bags for recycling. Trex, a company that makes outdoor products from recycled plastic, maintains a list of retailers where consumers can return plastic bags. Trex maintains the list because it needs the returned bags as raw materials for its products.

Sephora and Ulta Beauty encourage their consumers to clean and return beauty product containers to its stores so they can be recycled and turned into carpets, pallets, asphalt, new packaging or other uses. Nordstrom, Nordstrom Rack and Nordstrom Local offer a similar beauty product container take-back programs called BEAUTYCYCLE. Multiple Nordstrom and Nordstrom Rack stores also collect clothing for donations or consumers can donate clothing by mail through its Give Back Box program.

Final thoughts

Circularity will become as transformative to the retail industry as the invention of double-entry accounting, the cash register, the delivery truck, the internet and the phone app combined. None of those innovations changed the fundamental retail business model — earning a profit while making it easier for consumers to obtain the products and services they need — but each innovation created new opportunities.

While neither resale nor recycling addresses every aspect of retail circularity, they reflect significant investments to build the tools and business models that will power future circular solutions.

NRF's Center for Retail Sustainability

Check out NRF’s industry hub designed to support retailers’ efforts to generate economic value while creating net positive environmental, social and community benefits.

The modern internet was not created overnight. The retail executives who first embraced ecommerce did so before most consumers had computers in their homes and long before cell phones were connected to the internet. They saw opportunities while watching small groups of hackers get excited about communicating through computers and developing protocols to make it easier to do so.

It was the early pioneers solving one problem at a time that made ecommerce possible. The retail pioneers of today are busy building a circular future.

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