How Circular Commerce Can Help Retailers Stay Resilient

Recent macroeconomic pressures have had a sizeable impact on global trade, with a ripple effect on many industries, not least in retail. While the latest U.S. retail spending data shows positive signs of consumer resilience, the National Retail Federation predicts the combined impact of tariff uncertainty, inflation, and squeezed consumer spending will contribute to slower retail sales growth in the U.S. over 2025.

In response, savvy brands are innovating and exploring new revenue streams to adapt to these challenges, and circular models and solutions are proving increasingly attractive. "Recommerce" strategies that give surplus products a second life are gaining popularity across industries from fast-moving consumer goods (FMCG) to fashion and technology, creating additional revenue opportunities and rewarding consumer loyalty. And there’s still huge potential to be met across the spectrum.

The popularity of circular commerce hasn’t come out of the blue. Many retailers are looking at it more closely now because of cost pressures, but it’s a solution that’s grown organically over the years. While once tied closely to businesses' ESG objectives, circular commerce has proven to be popular with an increasingly environmentally aware consumer base, making it both sustainably and commercially attractive. Today, it also offers a highly practical solution for tech retailers in response to increasing costs.

The Practical Benefits of Circular Models

By refurbishing and reselling returned or excess stock domestically, retailers can reduce their exposure to import tariffs and maximize the life and value of products already in circulation. Managing returns is an expensive business: a report by IHL Group cites that overstock, including returned items that can't be sold as new, costs the retail industry a colossal $562 billion. While many brands have introduced stricter measures on returns to help manage costs, recommerce offers a robust and additional solution.

Trade-in also allows retailers to feed their pipeline of refurbished product ranges, while simultaneously lowering the up-front costs of new items, powering new product sales and shortening upgrade cycles. It’s an approach that many consumer technology brands have adopted to keep customers within their brand ecosystems.

When done at scale, these initiatives form a powerful toolkit that can boost margins and customer loyalty. However, there are some fundamental practices retailers need to have in place for it to be successful.

The Circular Mindset Shift 

It can take something of a mindset shift to adopt a circular commerce strategy, but returns, trade-ins, and unsold stock should be treated as untapped resources that can generate revenue.

On a practical level, this should start with an effective reverse logistics process that tracks each item from return through resale using automation and real-time data to assess what’s coming back, its condition, and its profitability. The goal is to get products back into circulation quickly, without adding complexity or inventory risk.

These products should be positioned as quality, value-driven choices, appealing to cost-conscious and sustainability-minded customers, rather than as compromises. Implementing structured, tiered quality grading and clear communication will help to highlight the unique benefits of secondary technology and ensure these products complement rather than compete with new devices.

At the same time, well-designed trade-in programs make new tech more accessible for consumers by reducing upfront costs, allowing retailers to grow sales without relying solely on discounting. The most successful circular programs use trade-ins to strengthen brand loyalty, tying consumers into a brand’s ecosystem and feeding future sales. When this is done well, with a seamless customer experience, circular models not only recover value but reaffirm the relationship between brand and consumer.

Future-Proofing Retail Models

We're in a new era — one that’s providing a stress test for retail models that rely on long, global supply lines. In the face of these challenges, brands are adapting their approach, with circularity offering an innovative and resilient additional model to consider.

Crucially, as it increases in popularity, businesses are discovering that circularity isn’t simply a story about sustainability. Far more than that, it’s a proven strategy to preserve margins and introduce new revenue streams in a world where cost pressures and customer expectations keep on climbing.

At Alchemy we’ve spent years helping retailers do this at scale, having already returned over 12 million electronic devices — including smartphones, laptops, wearables and headphones — back to the market. Each of these items tells the same story: what was once considered waste has the potential instead to create new revenue. And that starts with seeing every product that comes back not as a burden, but as a new beginning.

John Doughty is senior vice president of global partnerships at Alchemy, the world’s fastest-growing global circular technology company.