Traumatic Change and the Rise of the #secondarymarket – Highlights of the #ReverseLogistics & #Sustainability Conference (RLSC) 2017

The pace of change is unprecedented and it is uncomfortable, says Arizona State University Professor, Dr. Dale Rogers, who kicked off the fourth annual RLSC conference in Dallas on March 7th, with evidence to bring the angst home:

  • Intel to reduce its global workforce from 100,000 to 40,000
  • Shopping malls in America closing – going from 1100 to a predicted 7 or 8 hundred in the next 5 years
  • A plethora of new technologies from Cognitive Computing (like speech and image recognition) to the Internet of Things (IoT) to blockchain (a distributed database for financial transactions that enables decentralized transactions) changing how we do business
  • Political change – policy change
  • The continued rise in e-commerce, the sharing economy and supply chain financing

It’s intuitively obvious that closing malls correlates to the rise in e-commerce but I think it’s also worth considering some of the other likely factors contributing to this changing landscape. A former “younger” generation considered the mall a destination and place to hang out. This younger generation is:

  • Native to e-commerce – no learning curve or behavior change needed
  • More likely to “hang out” on line – that’s where the social scene is
  • Less likely to own a car – as part of the sharing economy unlikely to call a Lyft or Uber to do something much easier and less costly (for them) to do online

Further, as e-commerce itself expands, the variety, price, availability and convenience makes me wonder if the estimate of 7 or 8 hundred malls left standing in five years is not overly optimistic.

The hope lies in part in the dramatic rise of the secondary market. As malls lose traditional anchor stores, more retail space is giving way to the secondary market retailers like Dollar Tree (and their ilk) and TJX (Marshalls and TJ Maxx). These stores compete effectively against both brick and mortar and online retailers alike – on price, variety, and increasingly on convenience. Dr. Zac Rogers, Assistant Professor of Operations and Supply Chain Management at Colorado State University, shared this slide:

The Growth in Retail Space by Square Footage by Retailer

The Growth in Retail Space by Square Footage by Retailer

The occupancy of retail real estate is rapidly transitioning to the giants of the secondary market. Seemingly “recession proof,” the U.S. secondary market is up 79% since 2008, to more than $554B in 2016, representing 3.0% of the GDP. And this is a win for sustainability. As companies find more and more viable outlets for the goods they cannot sell, less is destined for the dumpster. I recall with horror the headlines several years ago of certain retailers were found intentionally damaging otherwise serviceable goods before dumping them in the trash. Today, such behavior would be viewed in an even more unforgiving light because in recent years, sustainability and corporate social responsibility have gone from nice to haves to must haves in the eyes of customers, investors and employees alike. In a world where the ranks of the unemployed are swelling, the competition for the talented workers equipped for today’s jobs is fierce. And this new work force cares deeply about sustainability and the values embodied by their employers.

In my session at RLSC I talked about how we are pivoting our business in support of our environmental commitment. Using sustainability as an informing principle leads to greater efficiencies, greater profitability, and great innovation. Interestingly, Dr. Dale Rogers talked about how Patagonia uses its returns policy to drive more business – Patagonia will take its products back and repair them – forever. He didn’t mention that Patagonia is viewed as the paragon of sustainability in the retail space and that their returns policy derives directly from their core values.

As we grow sustainability within Arrow and among our stakeholders, I look forward to hearing more about your journey and exploring ways we can help. Drop us a line at valuerecovery@arrow.com. And I hope to see you all at next year’s RLSC.

Carol Baroudi works for Arrow promoting sustainability awareness and action. She is the lead author of Green IT For Dummies. Her particular focus is on electronics in the circular economy, with an emphasis on the IT asset disposition stage, e-waste and everything connected. Follow her on Twitter at @carol_baroudi and connect with her on LinkedIn at www.linkedin.com/in/carolbaroudi.

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