Tony Sciarrotta, executive director of the Reverse Logistics Association, speaks at the Reverse Logistics Association’s annual conference.
The numbers are too big to ignore.
With total returns projected to reach $890 billion in 2024, according to a report released by the National Retail Federation and Happy Returns, and retailers estimating that nearly 17% of their annual sales last year were returned, the quest for solutions that will help companies rethink and re-engineer the returns process has reached a fevered pitch.
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That quest to evaluate innovative technology solutions and seek out new ideas was the principal reason a record number of retailers and solution providers converged on Las Vegas last month for the Reverse Logistics Association’s annual conference.
The event, developed in partnership with NRF, addressed a plethora of key topics that traverse the reverse logistics industry including the benefits of circular solutions, how returned products are evaluated, and how shoppers’ attitudes toward refurbished and pre-owned are shifting.
Sessions also explored what technologies can be used to improve the customer experience, the talent dearth, the fight for financial backing, and, of course, how AI is likely to shape the future.
Scot Case, vice president of corporate social responsibility and sustainability and executive director of the Center for Retail Sustainability at NRF, believes circularity is climbing retailers’ list of priorities. He describes reverse logistics as the backbone of circularity.
At the conference, retailers were “exploring additional ways to optimize their returns and reverse logistics processes to reduce costs and identify new revenue streams, while also building circular retail business models that generate free sustainability benefits,” Case said.
“The basics of the returns and reverse logistics processes are similar across all product categories, but finding the most beneficial solutions requires understanding the unique needs of every product category within every geography.”
Conversations were far-ranging given the number of economic and geopolitical headwinds affecting reverse logistics, though several themes bubbled up repeatedly across the three-day event.
Where does the customer sit in the returns process?
Which technologies — including AI — are poised to change the landscape?
With legislation in the wings, how can retailers prepare?
A keynote delivered by Nordstrom executives Corinne Copello and Jason Bell challenged attendees to look for ways to improve both customer experience and operational efficiencies. Acknowledging Nordstrom’s renowned commitment to customer service and its generous returns practices, Copello shared the foundation of the company’s returns strategy — namely, giving shoppers the confidence that if something is not right, they can return it.
“In addition to confidence, customers value options and flexibility,” said Copello, who is the senior vice president of inventory operations at the retailer. “They want things to be convenient and easy.”
If customers are not satisfied, they can return an item purchased online or in-store at any Nordstrom or Nordstrom Rack store; Nordstrom finds that in-store returns offer sought-after opportunities to engage with customers in new ways.
Bell, Nordstrom’s senior vice president of supply chain operations, shared a three-year journey the company began in 2023 aimed at addressing the movement of returns through the supply chain. Nordstrom prioritized enhancing productivity at that time, and the team focused on efficiency gains in returns processing, supply chain and transportation cost savings, and improved quality control.
The results: every metric improved, allowing Nordstrom to see double-digit productivity improvement compared with the previous year.
In 2024, the priority shifted to speed. Here the team concentrated on faster credit processing for mail-in returns and improved internal networking optimization. It also upgraded the customer experience by delivering faster return credits.
This year, the spotlight is on decreasing return rates, Bell said. “There are a lot of processes that we need to keep our eye on, and the goal is to continue to optimize people, processes and technology,” he said. “We have opportunities when it comes to improving dispositioning … and developing telemetry, but we’re working on it and we’ll get there.”
Tony Sciarrotta, executive director of the Reverse Logistics Association, cited numerous takeaways from the Nordstrom executives’ remarks that other retailers should look to apply in their respective businesses.
“Two themes stood out — improve the customer experience to reduce returns and find ways to shorten the returns path to resale,” he said, mentioning the process of reselling returns by matching returns to shoppers’ wish lists.
In addition, he hopes to see more retailers adopt the Nordstrom approach to resell/reship returned goods from the ‘back room.’ “There are companies offering the software now to do this,” he said, “and more retailers should be able to utilize the programs.”
Along with the Nordstrom keynote, discussions about how returns affect customer behavior, loyalty and experience peppered numerous sessions. Speakers explored the buy online, return in store experience, examining some factors affecting satisfaction: Is it easy for the consumer to understand a company’s return policy? To what degree does product description play a role in prompting returns?
“The number one reason for returns is unrealized expectations.”
“The number one reason for returns is unrealized expectations,” said HP Senior Manager of North America Returns and Remarketing Julie Ryan, a finding that begs for improved product descriptions and more collaboration with marketing.
Rich Bulger, a partner at Capital Growth Partners and the author of “Going Circular: The Evolution of Reverse Logistics into a Competitive Weapon," encouraged attendees to rethink their approach to returns by starting with a close examination of the customer promise.
“What is the promise? Is it free shipping or a warranty of some sort? Take a really close look at those programs and how they affect returns. You’re looking for how to operationalize the process from the moment the customer decides to return a product until they receive the ‘expected return value,’” he said.
On the technology front, Brian Comiskey, senior director of innovation and trends at the Consumer Technology Association, laid the foundation for discussions about artificial intelligence and technology that interspersed nearly every session.
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Comiskey explored the topic of digital co-existence, drilling into emerging technologies such as AI agents, digital twins and humanoid robots — all of which he believes will push the boundaries of AI innovation. And he insists it is happening faster than many perceive. According to the CTA, 93% of U.S. adults are familiar with generative AI, and 61% of adults use AI tools at work.
How will AI affect reverse logistics? The short answer: improved security, scalability and simulation. Tools such as Agentic AI, digital twins and physical AI are expected to enhance efficiency, reduce costs, improve sustainability and transparency, and optimize the customer experience through automation, predictive analytics and data-driven decision-making.
Some of the technologies Comiskey encouraged attendees to monitor closely include humanoid robots, delivery drones, virtual try-on, autonomous vehicles and blockchain.
California’s Responsible Textile Recovery Act, better known as S.B. 707, received its share of attention as it is poised to upend the textile industry. Signed into law in September 2024, it establishes a new Extended Producer Responsibility framework for textiles sold in California, mandating that producers of textiles — including clothing, footwear and household items —implement and finance programs to reduce textile waste through reuse, repair and recycling.
Among the key goals of S.B. 707 are the need for textile producers to take responsibility for proper disposal of their products with incentives to ensure that sustainable practices are considered from production to disposal. The law also requires convenient drop-off locations by 2030 for consumers to return unwanted textiles.
Ultimately the purpose of S.B. 707 is to increase the number of textiles diverted from landfills, but “when it comes to extended producer responsibility, the textile industry is where electronics was 20 years ago,” said Paul Doertenbach, head of Landbell Group’s textile program, during a panel discussion.
“In the last 20 years our textile consumption has tripled. We don’t have a good collection structure in Europe, but we’re collecting about 20% of discarded textiles,” he said. The EU has written a circular economy action plan that is the foundation for change, but much like S.B. 707, European nations are at the very beginning of the process. “When we talk about the circular economy … it’s nice work, but it’s very exhausting and it’s not easy to implement.”
Europe is ahead of the United States in terms of sustainability and the shift toward a circular economy. Still, regulators are continuing to put new initiatives in place. For example, starting in 2025, the EU's Ecodesign for Sustainable Products Regulation requires companies to report on unsold goods; by 2026, it will ban the destruction of unsold products, initially targeting apparel and footwear. According to the European Commission, the ESPR “aims to significantly improve the sustainability of products placed on the EU market by improving their circularity, energy performance, recyclability and durability.”
Looking a little further ahead, 2027 will see the introduction of new EU rules to empower consumers for the green transition.
No one is quite sure what 2030 will hold but in the next five years the potential for change across the reverse logistics, the global returns industry and circular solutions appears boundless.