What 'no Spend' Means For Retailers

What 'no spend' means for retailers

Are consumer-led campaigns to spend less impacting retailers?

Written by

The Boston Globe


11 January 2024

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After Cheryl Luacaw’s mother passed away in 2022, the Jamaica Plain resident set about cleaning her mother’s bedroom. To her shock, she found bags of pricey, unopened merchandise, including a Chanel handbag, tags still on.

How sad, Luacaw thought. Her mother never got a chance to enjoy her purchases.

The experience prompted Luacaw, a retired state housing program specialist, to take the measure of her own belongings. She soon discovered boxes of new, unused clothing sitting in her own home — just like her mom.

So this year, Luacaw decided to stop buying stuff. She also plans to either resell the unused clothing or give it away to friends and family.

“I reached a saturation point,” said Luacaw, who’s in her 70s. “There are more important things to spend money on.”

Pledging to stop buying new stuff — or, as it’s known on TikTok, planning a “no-spend″ year — has become an increasingly popular perennial New Year’s resolution, akin to losing weight, saving money, or quitting smoking. And like the gyms and financial advisers that cater to those aspirations, an entire ecosystem has become more mainstream in recent years to encourage consumers and businesses to reduce overconsumption and overproduction by extending the life of existing materials and products.

Called “the circular economy,” the system rests on the core principle of using recycling, resale, and repair to minimize waste. While Buy Nothing groups and other ways to give away used stuff have long proliferated online, retailers are now also trying to get in on the trend.

For example, Crocs Inc. is running a pilot program in Boston in which consumers can return their old clogs to area stores to be recycled or donated to Soles4Souls, a nonprofit that donates clothing and footwear to local communities.

Best Buy, the world’s largest consumer electronics retailer, operates outlet stores that sell previously owned, refurbished televisions, computers, and smartphones.

The idea of a circular economy has been gaining traction in recent years amid growing concerns over global warming and environmental sustainability. Indeed, Goldman Sachs estimates this emerging market could hit $4.5 trillion globally by 2030.

During the pandemic, Maja Young, of Watertown, caught wind of her local Buy Nothing group on Facebook, where people post things they no longer want and then pick someone who needs the items to receive them.

Something clicked in the head of the 44-year-old mother of three. So Young pledged this year to buy less new stuff, an action she figured would not only help the environment but also declutter her life.

“It was about not trying to kill the Earth by not buying more and more crap,” Young said. “You always feel like you need things. But I have too much stuff. It’s overwhelming me right now.”

For example, instead of buying a new television for her daughter’s dorm room, Young simply found a used TV online that someone wanted to give away.

But the circular economy is not just about convincing consumers to change their behavior. The idea is also to get manufacturers and retailers to adopt a new mindset.

Among the people pushing for that shift is Andy Ruben, executive chairman and founder of Trove, an online startup that helps brands such as Levi’s, Patagonia, and Lululemon develop a secondary market for previously owned goods. He previously served as Walmart’s first chief sustainability officer.

Specifically, Trove develops technology that allows consumers to trade in merchandise at stores in exchange for gift cards. The retailers and brands then resell those products.

The overall goal, Ruben said, is to convince retailers and brands that instead of making and selling more merchandise, they can unlock value, whether through additional revenue or customer loyalty, from products they already sold.

For the retail industry, “the incentive is to produce more than we need and then do your best job to clear” the merchandise, Ruben said. “But we can actually get more benefit by taking an item we made before and already sold once and we can sell it again and again.”

Some analysts doubt the circular economy could seriously challenge traditional retail anytime soon. For example, fast fashion retailers like Shein and H&M that rapidly replace their inventories with new merchandise have flourished, especially among Gen Z shoppers.

And the US retail industry has long embraced the idea of trying to sell as many products as possible to consumers in one trip. Which means stores should carry the maximum number and variety of products.

The success of big box retailers such as Walmart and Target and wholesale clubs like Costco and BJ’s, based in Marlborough, has only reinforced that notion.

To this day, a retailer’s worst fear is missing out on a sale because it didn’t carry the product or ran out of it, said Carol Spieckerman, president of Spieckerman Retail consulting firm.

But more stuff means more waste. And some experts say there is a growing sentiment among retailers that they no longer need to sell everything to everyone. The “stack it high, let it fly” business model that has long underpinned the industry no longer makes economic sense because it costs retailers a lot of money to get rid of unsold, excess inventory, Spieckerman said.

Retailers are used to thinking, ‘The more we carry, the more we are going to sell'. But consumers no longer give credit to retailers for having big assortments. It’s hard to break the mindset that selling more stuff equals making more money.

Jeff Bornino, TMX President of North America

However, two developments have started to change retailers’ strategies. First, the pandemic severely disrupted global supply chains, affecting the variety of goods companies could stock. And there’s a growing realization that carrying lots of merchandise has not prompted consumers to buy more stuff. That’s especially true of apparel retailers, including department store chains Macy’s and Nordstrom that have struggled to grow sales.

“The customer today does not want an endless aisle,” Macy’s chief executive, Tony Spring, told analysts last November.

Retailers are starting to reduce the number of newly created products they are willing to sell. Before the pandemic, new and updated merchandise accounted for more than 5 percentof overall inventory, according to research firm Circana. Since then, that number has fallen to less than 2 percent, which means 98 percent of what we see today on shelves are older, more established products.

Those developments benefit the circular economy, especially the idea that overproduction and overconsumption actually wind up costing companies money while hurting the environment.

“I don’t need more stuff,” said Megan Pardoe, a 24-year-old bank relationship adviser in Nashua. “The clothes you have are fine. They are not torn or ripped. You just have to cycle through it.”

This article was written by Thomas Lee and originally published by The Boston Globe on January 11, 2024.

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