Managing the reverse supply chain is not just about managing returns. It’s a strategic advantage. Retailers embracing and mastering reverse logistics – the process of managing returns and end-of-life products – are tapping into a market projected to reach $4.04 trillion by 2034.

 Involving the collection, transportation and sorting of goods before re-manufacturing, refurbishing, reusing or recycling or disposal, reverse logistics is integral to a transition to circular retail. It must be built on a robust, like-minded, sustainable supply chain tracing materials across complex global networks, verifying ethical labor standards, and investing in new technologies. Sustainable reverse logistics practices extend product lifespans and re-route waste away from landfills. When STEF, a European leader in temperature-controlled logistics, delivers fresh fish to its customers in southern France, it picks up containers filled with fish wastes that will be used to produce fertilizers. 

Reverse logistics enables businesses to recover value from returned goods and minimize waste.

It's about efficient returns management, focusing not just on getting the product from the warehouse to the customer but the opposite. For example, Heineken’s French distribution company installed equipment at its customer sites that crushes and stores up to 20 kilograms of glass. This equipment reduces the space required for empty bottles by 80 percent, lowers transportation costs, and minimises health and safety risks for employees handling glass. 

Challenges to reverse logistics can include transportation policies, and costs associated with geography, scale inefficiencies, and the labour and storage locations required. New technologies such as robotics and AI can help. For example, luxury French brand Hermes partnered with Starship, maker of small six-wheeled autonomous courier robots, to pilot a returns pickup service in London.  

A notable challenge is that the growth in e-commerce has escalated the number of returns.

Each return subsequently generates additional financial and environmental costs. The use of AR and VR technologies (for example, virtual changerooms), better communication about product benefits, renting or subscription models, and many other initiatives can help drive a more circular future when it comes to returns management and reverse logistics procedures. But all supply chain stakeholders must be involved, including product and packaging designers, manufacturers, retailers and consumers.  

US retailer Kohl’s introduced The Return Drop at more than 1,100 of its locations. After initiating a returns process with participating retailers, shoppers can choose ‘Kohl’s Drop Off’ and receive a QR code to bring in with the return to a local Kohl’s location with no box or shipping label required. Kohl’s also partners with Amazon to accept, screen and send back Amazon returns in a single shipment. Customers who prefer returning products in-person benefit from this relationship, and Kohl’s gets a boost in foot traffic from customers who may not otherwise make a trip to its stores. 

Transitioning to a circular strategy is a differentiator for retailers. And the secret to reaping rewards with reverse logistics is Circana’s unrivalled supply chain solutions, data and analytics will optimize operations, improve forecasting and replenishment rates, enhance retailer collaboration, mitigate risks caused by disruptions, enhance customer experiences, and contribute to a more circular economy. Learn more in Circana’s Revitalising Retail Outlook Report.