‘Tis the Season of ‘Giving Back:’ The Environmental Impact of Holiday Returns

27 12 2023

Image: CNN

By MELANIE NUCE-HILTON via Sustainable Brands • Reposted: December 27, 2023

Addressing the fate of returned items — and the larger issue of ‘wrap, return, repeat’ consumer culture — requires adoption of smart technologies to offset losses and improve retail’s environmental impact during the holiday season and beyond.

Tis’ the season for gift giving; and unfortunately for retailers, that means a rush of returns is just around the corner. Four in 10 consumers expect to return at least one gift to retailers during the holiday season – in fact, 31 percent plan ahead for this by buying multiple variations of the same item. It’s no surprise return volumes are projected at $627.3 billion in 2023 — shedding light on the hidden costs associated with the season of “giving back.”

Returns — encompassing wasted time, packaging and energy — pose significant challenges for retailers. The average return costs around $30, prompting 59 percent of retailers — including Amazon, Target, Walmart and Wayfair — to adopt “returnless” or “keep it” policies for items with return costs surpassing their actual value. However, the fate of such products still rests with the customer — with only 34 percent inclined to donate returnless merchandise, highlighting the barriers to environmentally responsible disposal.

To address the escalating cycle of excessive ordering and returning, retailers must adopt innovative strategies. These include leveraging consumer reviews and technology to assist shoppers in finding accurate sizes, charging for returns to discourage frivolous behavior and employing smart warehouse automation to streamline back-end logistics. Efficient inventory and return management are crucial to offsetting losses and reducing environmental impact.

Rethinking the ‘wrap, return, repeat’ status quo

Most consumers assume that returned items find their way back to store shelves, but the reality is far from guaranteed. The life and sustainability of a return varies across retailers due to differences in condition, packaging, tags and duration away from the store. This intricate process — involving shipping, inspection and sanitization — often costs retailers up to 66 percent of the product price.

As a result, many retailers opt to send perfectly usable items to destruction zones and landfills — contributing to the alarming 5.8 billion pounds of goods returned to US retailers that end up in landfills annually. Perhaps more troubling is the fact that 71 percent of consumers would alter their shopping habits if they were aware of thiswasteful reality. Some 40 percent of storeshave begun charging for returns to dissuade consumers from sending products back; but this strategy risks alienating consumers who prioritize customer experience and cost savings amid an inflationary economic climate.

Addressing the fate of returned items — and the larger issue of “wrap, return, repeat” consumer culture — requires adoption of smart technologies to offset losses and improve retail’s environmental impact this holiday season and beyond.

Improving efficiency from sleigh to shelf

Successful inventory and return management hinges on knowing exactly what is in stock and where at any given time, so retailers can ensure all returnable products make it back on the shelf and online availability accurately reflects physical inventory. This allows them to sell down to the last item, offer final-sale discounts on products that are frequently returned, and take additional steps to mitigate overstock that may take up valuable warehouse space. Technologies such as radio frequency identification (RFID) help retailers track and trace items accurately, and enable the seamless return of products to shelves. RFID also aids in combating fraud — a significant concern during the holiday season. According to the National Retail Federation, for every $100 of returned merchandise, retailers lose $10.30 to fraud; and there’s a 70 percent increase in fraudulent returns during the holidays. It often occurs in the form of wardrobing (or wearing and returning), or when consumers return empty boxes or stolen goods.

Moreover, smart warehouse automation — combining human expertise with robotic efficiency — reduces restocking charges and alleviates strain on supply chain workers. Automated systems are also highly scalable and adaptable to changing demands. As the volume of returns fluctuates during peak seasons such as the December holidays, automation can be tuned accordingly — ensuring that the supply chain remains flexible and responsive to market dynamics. The incorporation of smart warehouse automation in the context of returns and restocking not only drives efficiency and cost-effectiveness but also fosters a more balanced and sustainable work environment for supply chain workers. This collaborative approach paves the way for a future where the challenges of returns are met with streamlined processes and reduced environmental impact.

Beyond the holiday season

However, even with these advancements, it’s important to consider the fate of non-returnable items and the broader issue of retail packaging. The unfortunate reality is that online retail alone is expected to use more than 4.5 billion pounds of plastic packaging by 2025. Additional estimates show that even though nearly 90 percent of cardboard boxes are recycled, 350,000 tons of them still end up in landfills today — and that’s not even mentioning the countless other packing materials or garments consumers throw away. The EPA estimates annual landfill methane emissions as equivalent to driving 20.3 million cars for one year — a clear call to action across industries.

Beyond the current holiday season, retailers acknowledge the need for systemic change. Initiatives such as persistent identification, integrating machine-readable data into product fabrics, and the movement towards QR codes replacing traditional labels showcase the industry’s commitment to reducing, reusing and recycling. One such initiative is Sunrise 2027 — driven by the retail industry with GS1 US. The effort is focused on the migration from UPCs to 2D barcodes, commonly seen as QR codes on product packages. These codes allow brands to link to limitless information about an item — such as the garment’s fiber composition and recycling instructions, via product packaging. Retailers will have to be able to scan these codes at POS by 2027 as brands increasingly shift to 2D. This shift aims to enhance sustainability by facilitating easier and more responsible disposal of products. There is even a movement for these codes to replace traditional clothing labels and tags, which produce enough label tape to reach the moon and back 12 times each year according to theAAFA.

Yet the long-term success of these efforts requires a collective consciousness among consumers regarding their purchases and a continuous commitment from brands and retailers to innovate and implement sustainable practices. As the industry advances towards more circular processes, it is the joint responsibility of consumers and retailers to navigate the aftermath of holiday returns with an environmentally conscious approach.

The retail industry is making progress on sustainability every day; but long-term results will require consumers to be more conscious of what they purchase and where the items go at the end of their lifecycle — and for brands and retailers to continue finding new ways to reduce, reuse and recycle.

Melanie Nuce-Hilton is SVP of Innovation and Partnerships at GS1-US — a not-for-profit, international organization developing and maintaining standards for barcodes. See the original post, follow this link: https://sustainablebrands.com/read/waste-not/season-giving-back-environmental-impact-holiday-returns


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Otrium Is The Sustainable Discount Designer Retailer You Didn’t Know You Needed

13 03 2023

By Kristen Philipkoski, Contributor from Forbes.com • Reposted: March 13, 2023

Eco-conscious fashion is on the rise, but one of the most environmentally damaging industry practices—overproduction—is still common.

Fashion brands routinely produce up to 40% more clothing than they think they’ll ever sell, according to several reports. Clothing companies hope overzealous consumers will surprise them and buy more than forecasts predict. But, as frenzied as shoppers can get, they never buy all the goods manufactured.

As a result, many designers destroy extra merchandise to prevent it from winding up on the racks of off-price retailers and potentially devaluing the brand. Burberry was outed for burning $37.8 million in clothing in 2018. Chanel, Louis Vuitton, and Coach have also been caught in the act.

A new online marketplace called Otrium is providing a safe space for designers to sell their extra, previous-season merchandise at up to 70% off without diluting brand identity. With more than 400 brands already signed on, it’s the responsible shopper’s best kept secret—but it may not be that way for long.

“Every person I tell about this is like ‘how have I not heard of this before?’ This is the year we plan to make that no longer the case,” Otrium’s president and COO Zuhairah Scott Washington said during a recent press call.

Otrium was founded in 2015 by Milan Daniels and Max Klijnstra in Amsterdam and launched it’s American presence in 2021. Business in the states is quickly ramping up, with new brands consistently signing on—Closed and Rosie Assoulinebeing two of their most recent additions. In 2022, Otrium featured more than 5 million products, grew revenue by 1,000% year over year, and grew new members by 500%.

Its growth is thanks to its coveted designers and great prices, certainly, but also because of the unique business to business solutions it offers brands. The company prides itself on giving its partners access to tools that allow them to control their merchandizing, creating less of a warehouse feel and more of a luxury experience.

Brands can also track customer behavior and sales in real time.

“Partners are floored by the level of detail and data that they get about their businesses on our platform,” Washington said. “We really want them to see Otrium as their outlet and another channel for them… to help make better decisions about replenishing on our platform or even reproductions from their own core line of clothing.”

Otrium hosts both mass brands like Diane von Furstenburg and Tommy Hilfiger alongside higher-end (in the Designer Edit section) and cultish ones: Farm Rio is viral on Instagram, Reiss and Belstaff products are hard to find in the states, and Daily Paper is an edgy, inclusive favorite of the avant-fashion set, just to name a few examples.

This is not an entirely new concept—brands like Bluefly, Gilt, and RueLaLa pioneered the concept of selling past-season designer goods at lower prices—and all of those brands struggled to become profitable, eventually pursuing acquisitions in the early 2000s.

But Otrium hopes to differentiate its business by focusing on the sustainability angle and becoming a go-to for both brands and consumers who want to make more conscious consumption decisions.

Otrium also facilitates discovery across brands and hopes to guide customers to current-season, full-price products.

“We connect our consumers to a curated selection of brands they either already know and love, or brands they can discover with a great incentive to try them at a discount,” Mariah Celestine, Otrium’s U.S. General Manager said in an emailed comment. “This ease of discovery may also lead customers to pay full price for a brand’s regular collections, thereby preventing additional fashion waste and furthering our purpose.”

Celestine added that 60% of Otrium customers have tried a brand they’ve never heard of just because it’s on sale.

Fast Company recently named Otrium one of the most innovative companies of 2023 in the fashion and apparel category, “For convincing luxury brands to sell, rather than burn, last season’s merchandise.”

Industry experts say innovation is key to solving fashion’s pollution problem.

“Fashion has always been a hotbed for innovation, as well as a catalyst for social change; it’s time to leverage the industry’s creative energy to design better business models—ones that operate within the means of the planet rather than a take-make-waste approach,” wrote Angela Adams, a senior sustainability consultant at Quantis in 2021. “These could include rental, resale and repair schemes; pre-order models of production, print on demand and a departure from the traditional seasonal cycle; and a greater emphasis on product quality and durability, which is often compromised to fuel the industry’s unsustainable business model.”

Otrium’s tagline states that it wants to ensure “every piece of clothing that’s made is worn.” It’s a lofty goal, considering the literal mountains of unwanted clothing clogging African beaches, and considering Otrium does not partner with the fast fashion brands responsible for much of that detritus.

Otrium’s “code of conduct” requires partners commit to several environmental, social and government factors including fur-free garments, prohibiting human trafficking, child labor, slavery, discrimination in all forms as well as abiding by laws and regulations.

“Our aim is two-fold: to empower brands to improve their environmental impact and connect them to a base of conscious shoppers, and to help consumers build a timeless wardrobe of quality pieces that can be worn again and again, thus reducing the reliance on a ‘trend-driven’ consumption cycle,” Washington said. “This is not what fast fashion companies are known for.”

Shunning fast fashion just might be the way to go. A “total abandonment of the fast-fashion model, linked to a decline in overproduction and overconsumption, and a corresponding decrease in material,” is essential for reducing environmental damage, according to a 2020 paper published in Nature Reviews Earth & Environment.

Other experts say even small changes can make a big difference when it comes to the enormous problem or overproduction.

Reducing overproduction by just 10% could reduce emissions by about 158 million metric tons by 2030, according to a 202o study from McKinsey and Company and the Global Fashion Agenda.

Washington hopes that by helping consumers see fashion as a creative expression instead of a cycle of trend-driven consumption, they can be a catalyst for real change in the fashion industry.

“Fashion is the largest art form in the world,” she said. “And we’re really excited about providing an opportunity that allows individuals to determine their own style—not just take what people say is the hottest today but really giving them a sustainable alternative to find items that speak to them and their own personal style.”

To see the original post, follow this link: https://www.forbes.com/sites/kristenphilipkoski/2023/03/10/otrium-is-the-sustainable-discount-designer-retailer-you-didnt-know-you-needed/?sh=29b6d0a95494


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