For more than 20 years, the Reverse Logistics Association has focused on what to do with unwanted products. That includes products that were purchased and returned by consumers shortly after purchase, that retailers or manufacturers were unable to sell, that were recalled for missing parts or safety issues, and that are expired or no longer needed because an organization or consumer is upgrading to a newer version. RLA represents the industry that is managing unwanted products, ensuring they are recovered efficiently and responsibly redirected where they create the highest value.
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The National Retail Federation acquired RLA in the fall of 2023 because combining forces and further accelerating improvements in the reverse logistics industry will create consumer value, improve efficiencies, lower costs and create environmental and social benefits. Reverse logistics is the future of circular retail. The future of both industries will be explored in depth at the NRF Reverse Logistics Association annual conference in Las Vegas, March 11-13.
Consumer returns are a significant cost for retailers and consumers. A recent study by NRF and Happy Returns, a UPS company, reports that consumers will return $890 billion of goods sold by retailers in 2024, representing 16.9% of annual sales. This return rate is more than double the 8.1% and $309 billion from 2019. Most of the growth in return rates is driven by the rapid growth of online purchases — return rates for online purchases are 21% higher than overall return rates.
While consumer returns represent a rapidly growing part of the reverse logistics industry, the industry also manages unwanted assets.
In the retail industry, these assets include unsold inventory. Across the broader business community, they include unwanted office electronics, including computers and servers that are being replaced with updated models, and unwanted office furniture resulting from office redesigns. Some of these assets are returned to the manufacturer. Others are refurbished and resold, disassembled for parts, donated or recycled.
Retail returns represent both an opportunity and a cost for retailers, whether a product is originally purchased in-store or online. Every return represents a chance for retailers to enhance the consumer experience and increase customer loyalty. An effective returns program demonstrates that a retailer stands behind the products it sells and is focused on customer satisfaction. The recent NRF and Happy Returns survey results show 67% of consumers claim that a bad returns experience discourages them from shopping with the same retailer again.
Some consumers regularly purchase items online intending to return them. When shopping for fashion and footwear online, for example, 40% of all consumers report regularly or sometimes buying items with the intent to return them. Younger generations do so at higher rates, including 51% of Generation Z consumers.
Higher return rates generate higher costs for retailers, which must then pass those costs onto consumers. To manage those costs, 66% of retailers are charging for at least one return method. Others are reducing the time consumers have to return items or limiting return options for those consumers with significantly higher than average return rates.
While a convenient returns process benefits consumers, every product return also generates costs to the retailer that are ultimately passed along to customers. The costs include:
Returns processing: This includes visibly inspecting the returned item for any damage and issuing the consumer a refund. For some items purchased in-store and returned in-store, the returned item, after passing inspection, might be placed back on a store shelf or clothing rack to sell again as new.
Logistics costs: For products returned in-store that cannot be immediately restocked, the retailer must pack them for shipping back to a distribution center, bundling them with other returned products, loading them onto trucks, transporting them, unloading, unpacking and preparing the product for its next journey. Online returns incur related shipping costs.
Inventory management: Once returns reach a distribution center or a specialized returns center, each individual item must be assessed to determine whether it can be sold again as new, sold to another customer at a discount, or whether the product is now a financial loss and should be liquidated, donated or recycled.
When the reverse logistics industry gathers in Las Vegas for the NRF Reverse Logistics Association conference, it will explore evolving technologies, innovative solutions and new challenges. Deploying artificial intelligence to find the right balance between convenience and cost is key. AI can also be used to ensure that products are considered for resale, reuse or donation before they are considered for recycling.
Attendees will also discuss new regulatory drivers like the recently signed California Responsible Textile Recovery Act. The law requires fashion and textile producers to fund systems to make it easier for consumers to responsibly manage their unwanted fashion and textile items.
This year’s RLA conference will feature two senior Nordstrom executives, Senior Vice President of Inventory Operations Corinne Copello and Senior Vice President of Supply Chain Operations Jason Bell. Other retail brands speaking and attending include Amazon, eBay, Goodwill, The Home Depot and Walmart. The conference will be followed by a meeting of retailers and solution providers focused on addressing the California and related extended producer responsibility laws and finding ways to scale circular retail solutions.
More information on the NRF Reverse Logistics Association conference agenda and registration information is available online.