Consumers, particularly those in the United States, have grown to love the convenience of omnichannel retailing—the ability to purchase a product online, return in-store, and expect seamless service in between.
However, beneath the surface of this flexibility lies a growing operational and environmental problem that most shoppers—and many retailers—haven’t fully confronted. Nicole DeHoratius, a professor in Columbia Business School’s Decision, Risk, and Operations Division, examines these unseen costs in her research, which centers around retail operations, supply chain management, and customer satisfaction.
In her research on “stray inventory” in clothing retailers and emerging work on food waste in grocery retail, DeHoratius has found that operational execution in supply chains cannot be overlooked if leaders want to ensure their business is sustainable while protecting their bottom line.
A Hidden Drag on Retail and the Planet
The rise of “buy online, return in-store” (BORIS) options may offer customer satisfaction and foot traffic, but it also introduces a serious challenge: inventory returning to stores where it was never meant to be sold. DeHoratius and her co-researchers–Christoph Baldauf of the Stockholm School of Economics, Fredrik Eng-Larsson of Stockholm University, and Olov Isaksson of Stockholm University–call this stray inventory, items that disrupt the curated product mix, clutter shelves, and ultimately hurt store performance and the planet.
Stray inventory isn’t just excess stock; it’s fundamentally misaligned with store planning. Customers might buy a bathing suit online in December and return it to a store carrying only winter apparel. That item, now out of season and out of place, ends up on a clearance rack or in a cluttered backroom. It often sells slowly—if at all—and at a steep discount.
Overall, we need to be embedding the cost of these returns on the environment and on consumer behavior into the cost of doing business.”
- Professor Nicole DeHoratius
DeHoratius and colleagues found that stray inventory reduces store conversion rates in a large-scale study conducted with a European apparel retailer. Each additional piece of stray inventory was associated with a measurable decline in daily store sales, not because of steeper markdowns but because customers were less likely to make purchases. When foot traffic was constant, stores with higher levels of stray inventory saw fewer transactions.
Retailers often defend BORIS as a driver of in-store engagement and a way to quickly restock returned items. However, DeHoratius’s research shows the opposite: Stray inventory can cannibalize higher-margin products, degrade the shopping experience, and bog down staff with unnecessary restocking. Perhaps most concerning, many of these returned goods risk eventual disposal, especially if markdowns or salvage efforts fail—adding another layer of environmental waste.
“Overall, we need to be embedding the cost of these returns on the environment and on consumer behavior into the cost of doing business,” DeHoratius says.
DeHoratius suggests that omnichannel return policies need to evolve. Strategies include restricting which stores can accept certain returns, investing in centralized return hubs, and refining assortment planning so that stores can more seamlessly accommodate online merchandise. Retailers should also in- corporate return activities into their labor planning, as forecasted sales are often the key driver of staffing levels. Sometimes, discouraging in-store returns altogether makes sense, despite customer preferences.
What’s clear is that operational decisions—often seen as secondary to sustainability goals—are, in fact, central to achieving them. Reducing retail’s environmental impact requires better alignment between inventory strategy and customer behavior.
Food Waste in the Age of Omnichannel Groceries
While apparel faces one set of challenges, omnichannel grocery retail presents another: food waste. In a related stream of research, DeHoratius and her co-researchers, Eng-Larsson and Pedro Amorim of the University of Porto, are investigating how the move to online grocery fulfillment is changing store waste patterns—sometimes for the worse.
Her early findings center on an increasingly common practice: using in-store employees or third-party “pickers” to fulfill online grocery orders from existing store shelves. This strategy offers operational advantages—the same inventory pool serves both in-store and online customers—but in practice, it may be exacerbating waste.
The issue stems from the way pickers select products. Most are instructed to prioritize freshness, consistently choosing the newest items over older stock. This can disrupt first-in, first-out inventory flow, leaving older perishables to linger past their expiration dates. The result? More waste, especially in categories like produce and dairy.
Professor Nicole DeHoratius
“We need to be thinking about better matching supply with demand—having better planning tools so that we’re not left with a bunch of wastage. And then, if we are, how do we accommodate that wastage?” DeHoratius says.
One potential remedy involves redesigning the fulfillment network entirely, shifting from in-store picking to dedicated “dark stores” or micro-fulfillment centers where inventory turnover can be more tightly controlled. Another solution is a change in training and incentive structures to balance freshness with waste reduction.
DeHoratius also highlights the importance of embedding environmental and financial waste costs into decision-making models. Most retailers don’t factor the environmental cost of overstocking, returning, or discarding items into their procurement algorithms. Until they do, waste will remain a “free” externality in operational terms.
Creating Leaders of Sustainable Supply Chains
Beyond her research, DeHoratius is also preparing future leaders to navigate these complex trade-offs in her new course at CBS, Leading Sustainable Supply Chains and Operations. The course draws directly from her research and industry experience to help students rethink how supply chains intersect with climate goals, labor standards, and business resilience.
The curriculum is built around a practical four-part framework: reduce costs and risks through operational efficiency, manage lifecycle impacts through better design, unlock innovation through circularity, and drive equitable growth through workforce empowerment. Students analyze real-world case studies, from apparel companies grappling with overproduction to fast food franchises managing sustainable beef sourcing. The focus is always on equipping students with the tools to measure trade-offs and design operations that align sustainability with strategic goals.
One central message of the course is that true sustainability isn’t just about long-term aspirations—it lives in the day-to-day decisions of supply chain leaders. Whether determining return policies, managing inventory, or partnering with suppliers, business leaders have far more power to influence environmental outcomes than they may realize.
DeHoratius emphasizes that awareness is often the first step. Many students, she notes, arrive at the course with limited exposure to the down- stream consequences of consumer behavior, such as product bracketing or fast fashion returns.
“Education is a huge part of helping people change behavior,” she says. “The second component is that they will all end up in leadership positions where they will have control or decision rights over some of these elements.”
By showing students how their individual and professional choices reverberate through global systems, the course aims to create not just informed operators but responsible ones.
Key Takeaways for Business Leaders
- Unplanned inventory can cannibalize profits and increase landfill-bound goods, eroding both margin and sustainability.
- From return policies to procurement models, operational decisions are key to aligning business goals with climate impact.
- Limiting inventory return locations forecasting return volume, and integrating returns into labor and inventory planning are strategies to consider.
