The Implications of Digitalization in Retail Service Delivery on Circular Economy in Nigeria: An Exploratory Case Study

Abstract

The circular economy (CE) model has gained greater recognition and acceptance in recent years for its potential to enhance sustainability. Within this context, many practices in the retail sector are being overhauled through technological innovation, thereby changing the business landscape. Digitalization facilitates this transformation to mitigate the impacts of climate change without sacrificing productivity. This article explored the implications of digitalization in retail processes for CE in Nigeria and advanced practices that improve efficiency. Research efforts on circularity and digitalization have concentrated on advanced economies; consequently, little is known about the situation in lower-income countries. Due to the exploratory nature of this research, a qualitative approach that combined multiple data sources was adopted. Specifically, a case study of four major grocery retailers was carried out through documentary evidence supplemented by integrating thematic categories from semi-structured interviews with seasoned retail professionals. The findings revealed that (i) the circularity paradigm is a relatively vague concept among retailers in Nigeria; (ii) digital technologies are adopted primarily for the business value they create rather than to regenerate the ecosystem; (iii) the retailers have adopted technological processes such as e-commerce channel, automation, real-time tracking, social media marketing, and digital payment; and (iv) retailers familiar with circularity favor shortening supply chains by investing in rural hubs, food waste reduction, and closed-loops and reducing the use of non-biodegradable packaging. Retail managers could gain insights from these results to move towards CE, foster efficient business processes, and enhance customer satisfaction.

1. Introduction

In recent years, the circular economy (CE)—an economic model designed to promote the efficient use of resources and minimize waste—has gained traction among researchers, policymakers, and business executives across the globe. This model challenges the traditional approach to production and consumption which has been dominant since the First Industrial Revolution [1]. It calls for the extension of the end-of-life of a product for as long as possible through reusing, sharing, repairing, refurbishing, and recycling [2,3,4]. As Dura et al. [5] pointed out, retailers are positioned to play an important role in the move toward CE. The CE concept is relatively ambiguous in Sub-Saharan Africa, where the linear economy model that ‘takes–makes–uses–disposes’ remains dominant. However, the challenges of unemployment, inequality, and poverty faced by many in Africa force producers and consumers alike to extend the lifecycle of products by ingeniously sharing, leasing, repairing, and reusing them. Business interest in CE is enhanced by the potential economic benefits of reducing wastage and using fewer material inputs in production and service delivery. Thus, firms explore digitalization, related technologies, business models, and initiatives as enablers of CE for customer satisfaction [6].

Digitalization, the exploitation of digital opportunities, is among the most significant technological trends responsible for stimulating noticeable changes in societies and businesses [7,8,9]. In retail, digitalization involves integrating digital technologies and strategies to improve operations, drive business growth, and enhance customer services. Industry 4.0 has ushered in artificial intelligence, blockchain technology, e-commerce, big data, cloud computing, etc. [7,10,11,12], significantly impacting the functioning of the entire retail ecosystem (see Figure 1). Firms use digital technologies to adapt their business models in response to volatile market environments [4,9,13], to keep up with competitors, and to satisfy customers [14]. These practices can simultaneously contribute to sustainability in line with CE principles to address environmental challenges [15]. As Wang et al. [12] aptly pointed out, technological innovation in production processes is a major element to consider when implementing CE. Business models such as closed-loop systems, cradle-to-cradle, product-life-extension, remanufacturing, upcycling, the product service system, and extended producer responsibility demonstrate efforts to enhance economic, social, and environmental values. Despite the benefits associated with digitalization, its successful implementation is dependent on investments and other associated costs [16]. Furthermore, the capacity of digitalization to facilitate service delivery in CE, particularly in the Global South, where most of humanity resides, deserves adequate research attention.

The current study examines how digitalization is applied as a CE approach to retail for efficient service delivery. Retailers are consistently seeking technologically advanced processes and solutions to match customer demands and ensure their satisfaction [17,18]. A crucial element in retail operations is the efficient management of resources across supply chains. As Telukdarie et al. [19] noted, digitalization reduces uncertainties and enables end-to-end business integration. Such interventions strengthen CE operations [20]. However, there is limited empirical research on how digitalization enables the transition to CE [5,6,21] and, to our knowledge, the literature on its potential for Africa is lacking. This paper is useful because it connects digitalization processes to CE, thereby contributing to bridging the research gap. To this end, we examined how digitalization facilitates retail operations in conformity with CE principles. This objective is guided by two research questions: first, how are retailers responding to the need for circularity? This question further addresses the necessity for the CE model in retail and the obstacles retailers encounter in their efforts to transition. Second, what digitalization solutions are utilized in retail to foster CE? The motivation for digitalization and barriers to its implementation were further examined. The remainder of this paper is organized as follows: Section 2 introduces the concepts of digitalization and circularity followed by a background of the study’s context. Section 3 describes the approach to data collection. Section 4 presents the findings from the empirical exploration. Section 5 offers a discussion of the results. Section 6 provides some managerial and research implications. Section 7 offers a conclusion.

2. Literature Review

2.1. Digitalization towards a Circular Economy

Digitalization has the potential to critically enhance service delivery in a circular economy. By leveraging digital technologies, organizations can streamline their processes, increase efficiency, reduce waste, and lower costs while providing efficient and more convenient services to customers simultaneously. Thus, digitalization can have significant implications for customer satisfaction. The lockdowns and restrictions caused by COVID-19 served as a catalyst in the rapid adoption of digital technologies by organizations [22,23]. A major benefit of digitalization within the CE is its capability to facilitate efficient and more accurate tracking and processing of customer orders [24,25]. Through this process, lead times are reduced, and delivery times are improved, thereby greatly enhancing customer experience. As products and materials move through the economy, digitalization allows for real-time tracking and monitoring to provide customers with greater visibility and transparency into the supply chain process [26].

Several studies (e.g., [21,23,27,28,29,30]) have shown that digitalization can help to optimize the use of resources and reduce waste. It opens unforeseen possibilities and offers the potential for the creation of radically new products and services through the combination of different technologies such as cloud technologies, sensors, big data, etc. [31]. By leveraging digital technologies businesses can increase visibility, create better demand forecasts, optimize production processes, and minimize waste while providing high-quality products and services to customers. This enhances customer satisfaction by ensuring that products are available when needed and that they are produced in a sustainable and environmentally responsible manner. On the premise that the linear production and consumption model is unsustainable, recent studies have examined CE approaches from the perspectives of various stakeholders and the important role of retailers. Retailers have the potential to significantly influence consumer behavior. Retail practices such as the layout of goods in supermarkets, offers, and sales promotions contribute to excessive consumption. As Mondejar-Jimenez et al. [32] observed, the marketing and sales strategies of food companies have a direct and considerably negative impact on consumers’ food waste. Borrello et al. [33] assessed the willingness of consumers to actively participate in closed loops to reduce food waste. Their findings suggest that, with campaigns and awareness-raising programs, consumers are increasingly likely to change their actions and prevent food waste.

2.2. Circular Economy in the Nigerian Context

While CE strategies of a sharing economy, reusing and recirculating materials, reducing wastage in the production process, and extending the end-of-life of products [3,34] are prevalent in more developed economies, they are yet to be fully embraced in less-developed ones [2]. With 216 million inhabitants, Nigeria is by far Africa’s most populated country and most important market. The population is projected to reach 375 million by 2050 [35]. The consequences of population growth in terms of demands for energy, food, consumer products, and other resources are significant. Such demands present enormous attractive opportunities for investors. Yet, the damaging impact on the environment is potentially massive without abandoning the linear economy and adopting CE principles in production and consumption. As the main object of CE is to make better use of resources and reduce harmful impacts on the environment [36], technological innovations increase positive outcomes for both economic and environmental performance [21,37].

Nigeria’s retail market is currently fragmented, and over 90 percent of retail activities occur within informal channels [38]. Like most countries in Africa, Nigeria is a net importer of consumer goods, including used clothing and electronics, most of which sadly end up in landfills. The extant literature on CE in Nigeria has focused extensively on solid-waste management, an indispensable part of consumption. This is justified, as huge quantities of waste are generated every day, most of which is not sorted before reaching landfills. Environmental concerns stemming from ineffective solid-waste management, indiscriminate disposal of refuse, and pollution from methane gas released from the burning of landfills [2,39,40] have strengthened the clamor for innovative CE solutions. For instance, both Oyelola et al. [40] and Okere et al. [39] explored ‘Waste-to-Energy’ as a viable CE approach to manage waste for environmental sustainability. While Okere et al. [39] examined how ashes from combustion operations are utilized as fuel for the construction industry, Oyelola et al. [40] focused on transforming organic wastes, which constitute 68% of waste in Lagos (Nigeria’s most densely populated state), into biogas and compost. There is a consensus that explicit implementation of CE practices requires the intervention of stakeholders in both public and private sectors of the economy.

3. Methodology

The fundamental aim of this article is to identify the various ways in which digitalization is utilized in retail to facilitate service delivery within a circular economy framework. To this end, a qualitative approach that combined case studies with semi-structured interviews was adopted (see Figure 2). Employing multiple sources of data provides various perspectives and more information, which enables cross-checking and triangulation [41]. Case studies have been shown to provide accurate and sufficient data to understand complex business situations [42,43]. They create a rational chain of evidence from actual occurrences [44] for critical, in-depth analysis. Four major grocery retailers were carefully chosen as cases for analysis of their circular economy-led activities. These retailers were purposively selected for their scale of operations, locations, richness of available information, and a stated commitment to sustainability. Although the bulk of retail activities in Nigeria take place informally and by SMEs, we chose to focus on major retailers in this paper because they lead innovation and can influence consumers, manufacturers, and suppliers. Supermarkets were chosen primarily because food and daily necessities account for the bulk of household expenditure in Nigeria [38].

Documentary evidence was obtained through publicly available archival sources including company websites and social media handles, reports, published academic journals, media reports, and government publications. The content analysis technique was used to systematically analyze the various data obtained. This approach allowed us to gain insights into the CE practices of the retailers, identify patterns, and make inferences. Content analysis is a useful method that enables researchers to efficiently examine large volumes of data and identify trends [4].

To supplement the findings from the cases and to increase the research reliability, primary data were collected through 21 interviews of 14 retail professionals identified through purposive sampling (see

Table 1. Respondents’ profiles.

Respondent Code Name *	Education	Retail Type	Years of Retail Experience	Role in Firm	Number of Employees	CE Policy
Riode	Post-grad	Fashion and Pastry	9 years	Owner/manager	Less than 100
Akeke	Graduate	Hypermarket	12 years	Store manager	100–500	√
Iage	Graduate	Department store	8 years	Store manager	500–1000	√
Iruru	Post-grad	Supermarket	11 years	Store manager	100–500	√
Chidi	Graduate	Food and beverages	12 years	Owner/manager	Less than 100
Nwankwo	Graduate	Clothing materials	16 years	Owner/manager	Less than 100
Isoken	Graduate	Department store	4 years	Sales associates	100–500	√
Uche	Graduate	Supermarket	7 years	Customer service	100–500	√
Ese	Graduate	Pastry shop	6 years	Business manager	Less than 100
Bosede	Post-grad	Department store	12 years	Logistics manager	500–1000	√
Shoke	Graduate	Supermarket	8 years	Procurement officer	Less than 100
Majie	Graduate	Food and beverages	3 years	Sales associates	Less than 100
Deji	Graduate	Clothing and accessories	12 years	CEO	Less than 100
Musa	Post-grad	Grocery retail	6 years	Store manager	Less than 100

* All names are aliases for anonymity. √ Businesses with established CE policy.

for respondents’ profiles) and participant observation. Data saturation was reached with this sample size. Rich details from personal anecdotes and individual variations can be generated from qualitative interviews and data analysis to gain pertinent insights [45]. Seven interviews were conducted in person, while all others occurred over video conferencing platforms. Six interviewees work in retail organizations with established CE policies that target ecofriendly materials or efficiently designed goods. The interviews were audio recorded (with respondents’ permission) to ensure fidelity and lasted between 42 and 63 minutes. Obtaining data from multiple respondents in different retailing organizations and positions ensured data reliability and validity, reduced biases [46], and provided valuable insight into CE-related industry-wide issues.

The interview questions were developed to reflect the three core principles of reduce, reuse, and recycle associated with CE. The questions were open-ended and semi-structured around the two research questions focusing on retailers’ response to circularity, the obstacles to transitioning from the linear model, and their adoption of innovative digital technology. The main discussion questions are presented in

Table 2. Summary of the interviews’ main discussion questions.

Theme	Questions
CE policies and approaches	What compelling factors led to a move away from the linear economic model and the adoption of a CE approach? Ecological? Business necessity? How do you approach product/material recycling or reusing? When do products or materials become waste? What are the main causes of product/material waste? Who is most responsible for this waste? How do you minimize waste? What happens to unsold/leftover products? How do you dispose of product waste? How might sustainable and environmentally friendly approaches affect your business? What are the benefits of implementing sustainable business models? What are the major barriers/challenges to CE practices?
Application of innovative technologies in retail	What digital technology (e.g., internet, software solutions, AI, Cloud computing) has your business adopted? What are the main motivations for the choice in technology? How have customers been impacted by information availability, new purchase and payment processes, and faster delivery speed? What are the effects of these technologies on the environment? How have these technologies contributed to business sustainability? What impact have they had on customer satisfaction? What are the major barriers to using technology in your business?

below. We applied the laddering interviewing method (see [47]) to probe respondents for further elicitations and to reveal nuances, justify claims, and dig for deeper insights. Emergent themes were derived by coding the recurring patterns from the data, which subsequently led to the development of key categories.

Participant observation is a unique approach that enables researchers to take part in, study, and experience what the research population is experiencing in a natural environment [48]. One of the coauthors of this paper is a retail professional (a managing director of a retail company) with over ten years of industry experience. She offered her reflections and in-depth insights and provided an oversight for this study through formal and informal interviews and discussions with key industry informants.

4. Findings

4.1. Case Descriptions

A systematic analysis of secondary data yielded interesting results.

Table 3. Summary of CE measures and processes applied by the retailers.

Retailer *	Digitalization Measures	CE Measures and Processes
STAR Mart	Began offering online ordering in 2020 and same-day home delivery (in partnership with Kwik) in response to government restrictions due to the COVID-19 pandemic. Engages customers through various social media platforms. Real-time tracking of grocery pick-up and delivery status. Diverse digital contactless payment methods. Real-time management and automated ordering systems.	Local sourcing to reduce long distance transportation and shorten the supply chain. Supports sustainable agriculture practices. Invests in rural hub projects to increase yields and reduce post-harvest loss from source to store. Launched initiatives to reduce food waste, remove excessive packaging, develop durable and sustainable packaging, and increase recycling capabilities. Connects with consumers to offer products nearing sell-by dates at reduced prices. Minimum order value of ₦2000 (about $5) and a fixed delivery fee. Customers able to select the day and timeslot convenient for them.
Princess Nest	Offers online shopping. Digital tools to tackle food waste. Use of blogs and social media to connect with customers. Loyalty program	Partnered with charitable organizations to donate food nearing sell-by dates. Reduces plastic waste. Introduced environmentally friendly solutions. Optimized transport and logistics efficiency through new innovations.
Grand Market	Offers online shopping. Same-day grocery delivery. Active social media platforms. Optimized storage facilities. Circular loyalty program.	Continuous packaging redesign Focused investments and partnerships to reduce waste instore and along the supply chain. Encourages partners to step up recycling initiatives. Reduced energy use through solar panel installations and innovative lighting and refrigeration practices.
Adaze Superstore	Offers online shopping. Same-day delivery. Contactless payment and delivery. · Order tracking. Customer loyalty program encourages environmentally sustainable practices.	Reduced single-use plastic products. Educates customers on ways to reduce negative environmental impacts. Prioritizes food waste reduction in its collaboration with partners and stakeholders. ∙ Eliminated single-use plastics instore and offered reusable alternatives. Reduced emissions and improved efficiency by integrating sustainable materials and technologies.

* The names of the supermarkets have been changed to maintain anonymity.

presents a summary of the different measures and processes adopted by the various grocery retailers that constitute the cases for this study. The results are divided into two parts representing measures for digitalization on the left and circularity on the right.

4.1.1. STAR Mart

STAR Mart is a leading supermarket chain with fourteen stores across five major cities. Since its opening in 2009, the company has implemented innovative technological measures to align with CE, reduce its carbon footprint, and improve its business processes. It engages with customers through social media, introduced online ordering and home delivery in response to COVID-19, and initiated digital payment options. Digitalization has enabled STAR Mart to optimize its supply chain and energy consumption, minimize the use of resources such as water and solvent agents, and increase recycling activities. It also applies these tools in customer care and loyalty programs, supplier relations, and reverse logistics. The company launched initiatives such as a reduction in single use plastic, paper packaging, and food waste and ensured that non-recyclable materials were removed from its brand products. STAR Mart believes these sustainability efforts have enabled it to enhance customer satisfaction and to win several prestigious national retail awards including Best Retail and Superstore Brand.

4.1.2. Princess Nest

Princess Nest is a locally owned, one-stop supermarket offering quality products—fresh produce, consumer goods, and home appliances—to meet its customers’ daily necessities. The firm was established in 2009 and has five outlets in Abuja and Lagos. Leveraging big data, digital signage, and mobile apps, it offers customers personalized products and services tailored to their needs. Through its regular blog entries on healthy eating, Princess Nest engages customers on relevant issues concerning its product offerings. Digitalization enables its customers to also order online and through WhatsApp messenger and have their shopping delivered to them.

4.1.3. Grand Market

A self-styled digital market square, Grand Market is a one-stop store for groceries and consumer products that is committed to quality services and providing customers with unique shopping experiences. Founded in the year 2000, the retailer has stores in three major cities. It uses data analysis and digital processes to enhance collaboration with logistics and supply chain partners and develop innovative approaches such as its mobile friendly loyalty program to improve customer experience. Through digitalization, Grand Market determines discount percentages, defines promotion offer values and lengths of campaigns, and demand forecasts. It strives for solutions that reduce energy consumption and CO₂ emissions at various stages and processes of production, packaging, and recycling.

4.1.4. Adaze Superstore

Established in 2008, Adaze is among the fastest growing retailers in Nigeria, with 47 stores strategically located around Lagos neighborhoods. The supermarket applies the omnichannel model to serve different customer types. It has invested heavily in IT, modern payment systems, inventory management technology, and digital marketing to support both its brick-and-mortar and online operations. With a low-cost strategy, Adaze prioritizes customer satisfaction and shopping experience by offering reasonably priced products. Relying on innovative technology to provide customers with greater satisfaction has enabled it to grow rapidly and to compete favorably with competitors.

4.2. Interviews

Data from the interviews yielded pertinent insights into issues of CE, digitalization, and customer satisfaction in retail. We used ATLAS.ti, a data analysis software, to simplify the coding process, identify themes and relationships, and sort results into categories. The software was useful for coding and comparing opinions and for selecting illustrative quotations. This facilitated speedy data interpretation to uncover deeper and valuable insights and patterns. Per the thematic analysis technique, a six-stage process of data familiarization, code generations, identification of themes, review of themes, definition of themes, and report production [49,50] was followed. The transcribed data were uploaded into ATLAS.ti, where features such as ‘memos’ and ‘nodes’ allowed us to track changes and identify emerging relationships. After review and refinement, forty-one basic themes and six organizing themes were formed around two global themes, as illustrated in a thematic network in Figure 3.

4.2.1. Retail and the Circular Economy

All the interviewees were familiar with the CE multiple Rs model of reduce, reuse, and recycle and, to varying degrees, apply it in their retail roles. Unlike more developed economies, Nigeria’s national legislation and development plans have not yet captured the CE principles [51]. However, the respondents view the circular economy approach to retail and consumption as a viable alternative to the current dominant linear economy model. Long-term benefits of environmental sustainability and effective utilization of resources make the transition to CE worthwhile. Aesthetics, hygiene, waste management, and conservation are potential benefits of environmentally sustainable operations. In the words of one respondent:

The circular economy is the future and the right direction to undertake to save the world for future generations. Reducing waste and maximizing resource use will lead to a better, cleaner, and healthier environment. Despite the limited resources of many consumers, demand for products is increasing. As a retailer, I am very well aware of the impact of the current mode of consumption on natural resource depletion and on the environment’s degradation. My firm has initiated efforts towards sustainability and has adopted measures to reduce waste and increase efficiency.

(Iruru)

However, the shift towards CE is slow among retailers due to challenges that hamper its adoption. According to the respondents, the high initial capital investments required, the length of time needed to reach economically viable levels, manufacturers’ motivation in product design, weak government policy initiatives, poor infrastructure, and consumers’ lack of awareness were the major issues hindering the CE process in retail. As one stated:

Although these innovative ideas are attractive to us in the retail industry, the economic incentives are not well aligned. The long-term benefits may be high, but investors often want short-to-mid-term return on investment. For instance, the high costs associated with recycling infrastructure and maintaining the operations may put off shareholders.

(Bosede)

Further, the daily challenges of poverty, unemployment, and inequality faced by a significant percentage of Nigerian consumers of retail limit their acceptance of CE in several ways. Faced with insecure livelihoods and limited resources, consumers are less interested in aesthetics.

Consumers dealing with the impact of poverty are unlikely to be too concerned with sustainable practices. Reducing resource consumption and minimizing waste appeal less to those struggling to make ends meet.

(Chidi)

Retail businesses rely on producers and manufacturers of most of the commodities they sell. While larger retailers can potentially influence their suppliers’ behaviors to reflect CE’s sustainability goals, most retail organizations lack the scale to influence manufacturers’ product designs. Thus, products are often designed for a singular purpose, which makes it difficult to apply the principle of reuse. In the words of an interviewee:

Most products are not meant to last long or to be recycled. They are designed for specific usage so customers can come back to buy more as soon as possible. This ‘fast fashion’ approach works well for business profit but is not environmentally sustainable. Unless you are a major retailer, it is difficult to get manufacturers to design and produce long-lasting products or products that can be reused again for other purposes.

(Iage)

To conclude this section, we present

Table 4. Application of the principles and attributes of the 3Rs by respondents.

Interviewee	Reduce	Reuse	Recycle
Riode	Holds short-term inventory and optimizes inventory management	Repairs items such as logos, buckles, buttons, and straps from bags and clothes	Salvages logos, buckles, buttons, and straps. Encourages customer involvement
Akeke	Redesigns packaging of store brands to decrease the use of materials	Donates products to the needy to avoid or reduce waste	Source for packaging made from recycled materials
Iage	Sources products carefully from environmentally sound suppliers	Uses recycled and reusable shopping bags and encourages customers to do the same	Encourages customers to bring their own shopping bags
Iruru	Stocks products made from environmentally sustainable materials	Collects and reuses shipping boxes and protective materials	x
Chidi	x	Makes new items from existing products or materials	x
Nwankwo	x	Prolongs the shelf-life of products through adequate storage and maintenance	x
Isoken	Reduces the use of non-biodegradable packaging	Revives products and reintroduces them to market	x
Uche	Prioritizes organic and locally produced goods	x	x
Ese	Adopts a just-in-time inventory approach and reduces packaging materials used	x	x
Bosede	Conserves energy use	x	x
Shoke	Avoids overstocking. Good planning and accurate forecasting	Reduces paper and packaging waste	Provides recycling bins for customers to return used items
Majie	Minimizes the misuse or waste of raw materials	Promotes the quick sale of items nearing sell-by dates. Reuses paper and aluminum foil	x
Deji	Groups items and materials to reduce transportation costs	x	x
Musa	Uses natural, biodegradable leaf-packaging for some food products rather than aluminum foil, plastic bags, or paper bags	x	Sells out-of-fashion products to used clothes retailers

x indicates no active efforts at pursuing the initiative.

which summarizes the CE outcomes from the respondents and categorized them along the 3R model.

4.2.2. Digitalization in Retail

The circular economy model requires technological innovations and changes in business processes. In the retail sector, digitalization provides endless possibilities for process optimization and for firms to satisfy customers more efficiently. Among these are omnichannel retailing, mobile technology, logistics and supply chain optimization, inventory management, electronic commerce, digital payment options, and access to customer data. The respondents perceived digitalization as an enabler of the CE model. The following exchanges from four respondents offer illustrations:

Without modern technological advances our business would be so different. E-commerce allows us to reach far-flung customers and sell at any time of day or night. Our operating costs and advertising costs are much lower. We collect data on customer demographics like age, location, wedding anniversaries, shapes and sizes, birthdays, (and) style and dress preferences to tailor clothing and accessories to their needs. For pastries, we cater to different tastes and health requirements such as sugar or lactose intolerance.

(Riode)

We operate an omnichannel retail business which allows us to offer a smooth shopping experience for various customers through different channels sustainably. The online business model is less harmful to the environment than the pure traditional brick-and-mortar since it reduces carbon emissions.

(Iage)

Our supermarket has adopted RFID as a smart process of monitoring and controlling product inventories. It also allows us to collect vital data such as the location of products in real time to optimize operations. Such data allows for further product innovation to create customer satisfaction. With digital technology we can track product distribution more closely and engage better with our supply chain partners.

(Uche)

Digital technology has enabled us to improve our services in novel ways…. For instance, we now track and trace products easily and provide greater transparency in relationships with our partners. Technology allows us to reduce resource use in transportation and product distribution and location. It facilitates planning and forecasting, inventory management.

(Bosede)

Notwithstanding the manifold benefits of digitalization in retail and the CE, the interviewees highlighted several reasons why many retailers do not adopt them. The barriers are summed up in

Table 5. Barriers to applying digitalization-enabled CE in retail.

Barrier	Supply Chain	Distribution	Packaging	Reduce	Reuse	Recycle
Economic	High upfront costs Risk changing from linear to CE model Return on investment uncertainty	High upfront costs Lack of coordination Uncertainties	High upfront costs Limited economic incentives Lack of financial incentives	Limited economic incentives Lack of financial incentives	Limited economic incentives Lack of government support	Lack of investment High up-front costs in setting up collecting, sorting, and waste processing units
Government and legislative	Limited funding	Inadequate infrastructure	Lack of supportive policies	Lack of support for CE models	Legislative disinterest	Inadequate waste management infrastructure
Technological	Limited innovation Data privacy and security issues Inefficient coordination	Limited innovation Inefficiency	Lack of innovation			Limited availability of recycling facilities Low efficiency
Sociocultural	Customers’ unwillingness to bear higher costs		Customer resistance and hostility to change Limited awareness on consumption of single-use packaging	Lack of awareness among retailers Lack of awareness and incentives among customers	Customers’ resistance to change Unsustainable Cultural norms that look down on material reuse	Low efficiency on collection and sorting system Lack of awareness and incentives among customers

. These were primarily the costs of acquiring and utilizing technology, data and privacy concerns, the inadequate state of public infrastructure, and the lack of government involvement. Although the government has taken steps to promote sustainable practices and reduce waste through initiatives such as the Extended Producer Responsibility policy, which asks that manufacturers take responsibility in managing the environmental impacts of their products, there are no specific legislations on CE in Nigeria.

Adopting new technology for business and environmental sustainability can lead to huge costs. It is not cheap to go green both for retailers and customers, so it may not immediately lead to higher customers satisfaction. Cutting waste is good for business but might lead to more costs and lost sales opportunities, hence there are both positive and negative consequences.

(Riode)

Nigeria suffers from problems of poor infrastructure. Reliable Internet sources and electric power supply are major problems for business. Similarly, the substandard roads and insecurity artificially increases the cost of transportation and distribution of products.

(Ese)

5. Discussion

This research indicates that Nigeria’s retail sector benefits from digitalization. It opens new platforms and processes that enhance consumer services. COVID-19 accelerated the move towards technological adoption as many retailers were compelled to take new measures to continue serving customers during the pandemic. The study showed that competition, the desire for growth and efficiency, and customer satisfaction motivate retailers to engage digital technology. E-commerce, mobile/digital payment solutions, online tracking, customer engagement through social media, and data analytics were shown to be the most widespread measures taken. The retailers have also used digital innovations to optimize inventory, logistics and supply chain, manage loyalty programs and marketing campaigns. Consequently, the retailers can now reach a broader customer base, increase convenience and accessibility, and offer customized customer experiences. The study also revealed the crucial challenges such as internet connectivity, security concerns, infrastructural issues, and investment capital impeding the acceleration in digitalization.

The interview results show that the circular economy concept is largely unknown or unclear to many retailers. Those who are familiar with the model view it from the perspective of both a business and an ecological necessity. Some retailers have implemented recycling programs and partnered with other organizations to pursue various CE initiatives that are economically and environmentally viable. In line with previous research [4,21], our results show that digitalization is positively correlated with CE. The internet and data analytics optimize resource usage, improve efficiency, reduce waste, and extend product lifecycle. By enhancing supply chain transparency and streamlining reverse logistics, digitalization supports efficient collection, sorting, and processing of products. Digitalization also supports the retailers’ take-back initiatives that facilitates the return of used products from consumers.

Nevertheless, Nigeria’s infrastructural challenges, the higher business costs associated with sustainability, and the limited awareness among producers and consumers render results from these efforts modest. Respondents highlighted the lack of support for initiatives such as a closed-loop system, product-life extension, and the cradle-to-cradle manufacturing concept that ensures that materials are continually recycled and reused to prevent them from ending up in landfills. More efforts are needed from various stakeholders to highlight the necessity and urgency for an economic model where material resources and product life are extended through recycling, refurbishing, remanufacturing, and sharing to minimize environmental impact.

6. Managerial Implications and Recommendations for Future Research

The fact that consumers want quality and efficient retail service delivery and expect value for money is not contestable. Retailers now compete for customers on lower prices, reliable products and services that conform to specification, and on-time delivery to customers’ doorsteps. Digitalization has made it possible to achieve these expectations while conforming with CE objectives since technology can engender uniqueness, speed, and reliability. However, each retailer’s situation is unique, and they must adopt solutions suited to their contextual situations. As greater awareness of the need for circularity is achieved, retail managers must consider the application of CE models to product designs and material sources and organize their supply chains to comply with the principles. Management can create value for shareholders and meet consumers’ expectations sustainably by applying digital tools. Thus, strategic managers should evolve strategies to customize their offerings and service delivery to differentiate from competitors and to continually review these offerings in line with the dynamism of the business environment in terms of circularity, changing consumer tastes, and competitors’ activities. This will enable them to have the cutting edge in the industry and remain competitive. In a nutshell, retailers and strategic managers should be innovative in applying digital technology to respond to customers’ expectations in environmentally sustainable ways.

This study has made an important contribution to the CE literature by examining the concept in the context of retail in a less-known setting. However, there are various opportunities for further research on the topic. For instance, future research could examine specific digital technologies and evaluate their contributions to business sustainability and impacts on CE. The different innovative technologies discussed in this study cannot all uniformly impact retail or the environment. Additionally, this research encountered two main limitations which future studies should exploit for further enquiry and to bridge the gap in our current understanding. First, the limitations associated with the use of qualitative methodology, and second, the relatively small sample size used which makes it difficult to generalize the findings. Combining participant observation, interviews of industry experts, and case studies in an exploratory study were adequate to advance understanding. However, future studies could apply quantitative techniques that consider relevant variables separately to test new assumptions and create models which can then be used to make predictions.

7. Conclusions

Digitalization is a game-changer for the retail sector. Supermarkets can increase efficiency, enhance customer shopping experiences, and improve overall performance by adopting digital technologies. Digital innovations during the COVID-19 pandemic helped major retailers uncover new opportunities to maintain profitability. This paper examined the role of digitalization in retail to enhance customers’ satisfaction in a circular economy. Our findings reveal that digitalization can have a significantly positive impact on retail effectiveness, consumer satisfaction, and circularity. Retailers have employed digitalization strategically to customize, facilitate service delivery, and enhance competitiveness in a manner that minimizes negative impacts on the environment. Digitalization allows for transparency and promotes information and logistical flows. Notwithstanding these potentials, the adoption of digital technology in pursuit of a CE model in developing countries is fraught with challenges. Not surprisingly, there is not yet a strong focus on CE among retailers in the global south. Few may be aware of the concept, and fewer yet may take it seriously and apply the principles in their operations. Firms that have successfully operated on a linear retail model for years would require major incentives to switch to an ambitious CE goal. At present, in Nigeria, government CE policy initiatives are lacking, and the necessary legal and regulatory frameworks are nonexistent. The challenges of weak institutions, inadequate infrastructure, and lack of awareness among consumers further compound the march towards a circular economy.

This paper has contributed to advancing understanding of the current state of CE in a developing economy and the role of digitalization in employing the model. Although we focused on retail in Nigeria, CE practices apply to all levels of enterprise and society, and wider lessons can be drawn from our findings. As a sustainable development model, CE has the potential to influence innovation, reduce pollution, restore products, minimize waste, and conserve resources. Notwithstanding the relative vagueness of the concept in Africa, a transition towards CE can potentially unlock new economic opportunities, create jobs, advance sustainability, and contribute towards the United Nations Sustainable Development Goals. A holistic approach that involves government leadership, the adoption of new business models, and the development of competencies for innovative product design by the private sector is essential.