In the first half of 2025 alone, U.S. Customs detained 6,636 shipments under the Uyghur Forced Labor Prevention Act (UFLPA), a 44% increase over all of 2024. For hardlines retailers sourcing lithium batteries, steel components or copper wiring, the risk has never been higher. And starting in July 2026, all imported products requiring compliance certificates must be electronically filed through CBP’s ACE system, including shipments under $800 that previously avoided scrutiny.
For hardlines retailers, the margin for error has disappeared.
Why Hardlines Faces Unique Compliance Challenges
While softlines and apparel retailers spent the past decade building digital compliance infrastructure, hardlines has lagged behind. Furniture, hardware, toys and sporting goods retailers still rely on manual processes and fragmented spreadsheets.
The compliance challenge in hardlines is fundamentally different. A shirt might have a dozen components. A piece of furniture can have hundreds of parts from multiple suppliers across different countries, each facing different regulations depending on material, destination market and product category.
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Consider a children’s toy with lithium batteries. CPSIA requires lead and phthalate testing through CPSC-accepted labs. ASTM F963-23 mandates battery accessibility requirements. UFLPA scrutiny applies if battery components source from certain regions or any of the 144 designated entities. California’s Proposition 65 applies if the product contains any of 900+ restricted chemicals. The EU’s REACH regulations restrict a different set of hazardous substances.
That’s five regulatory frameworks governing a single product. Across thousands of SKUs, the scale and complexity of maintaining compliance becomes overwhelming.
Four Regulatory Shifts Reshaping Hardlines
UFLPA expansion creates unprecedented supply chain risk. The UFLPA Entity List has grown to 144 entities, with 78 added in 2024. Four new high-priority sectors were designated in 2025: caustic soda, copper, lithium and steel. Of the 6,636 detained shipments in the first half of 2025, only 17.2% were released without compliance action. For retailers sourcing electronics, hardware or appliances, documentation of sourcing origins has become critical.
Extended Producer Responsibility is now an operating requirement. Seven U.S. states now mandate EPR for packaging. Retailers are no longer simply distributing products. They’re responsible for tracking packaging materials through disposal and funding recycling programs. Twelve additional states are considering EPR legislation in 2025-2026, potentially covering 80% of the U.S. retail market by 2027.
CPSC enforcement has accelerated. In fiscal year 2024, the agency facilitated 333 recalls involving 41 million products. The July 2026 ACE eFiling mandate gives CBP unprecedented data access, enabling pattern analysis and predictive targeting of non-compliant importers.
EU CSDDD creates value chain liability. The Corporate Sustainability Due Diligence Directive applies to companies with over 5,000 employees and €1.5 billion in turnover starting July 2027, with lowering thresholds in 2028 and 2029. Unlike previous regulations, CSDDD covers entire value chains. Parent companies are now legally liable for supplier violations.
The Cost of Reactive Compliance
Reactive compliance is more costly for retailers than proactive programs, considering a single regulatory penalty can exceed $1 million. In September 2023, the CPSC levied a $9 million penalty against a wholesale retailer for failing to report a fire hazard.
Late-stage defect remediation costs $500,000+ per incident versus $50,000 for early detection. Port detention for 10 containers runs $125,000+ compared to $12,000 for pre-shipment verification. Manual compliance tracking consumes $1 million+ annually versus $200,000 for automated systems. These are the cost differentials separating compliance leaders from firefighters.
Category-Specific Complexity
No two hardlines categories face the same requirements. Furniture must meet California TB117-2013 flammability standards, CARB Phase 2 formaldehyde limits and Proposition 65 warnings. Toys require ASTM F963-23 compliance and CPSIA-mandated third-party testing. Electronics face RoHS restrictions, energy efficiency standards, UL certifications, FCC compliance and strict lithium battery regulations under UFLPA scrutiny.
General merchandise retailers managing multiple categories face hundreds of standards across thousands of SKUs from dozens of countries. Manual tracking isn’t viable.
What Intelligent Compliance Looks Like
Reactive compliance meant waiting for something to break. Intelligent compliance means predicting what will break before it happens.
Continuous regulatory intelligence is foundational. Regulations change constantly. California added vinyl acetate to Proposition 65 in January 2025. Utah eliminated online labeling requirements in April 2025, but manufacturers missed the transition, resulting in massive labeling waste. Leading retailers monitor regulatory changes in real time, automatically mapping new requirements to affected SKUs.
Automated risk scoring transforms supplier management. Advanced systems analyze supplier compliance history, regulatory violations, geopolitical risk indicators, financial stability and destination market requirements. When risk scores exceed thresholds, enhanced verification protocols trigger automatically. Procurement teams activate backup sources before problems escalate.
Defensible documentation matters today more than ever. When CBP challenges a shipment, can a retailer prove compliance across all supply chain tiers within one hour? Courts and regulators expect real-time verification capabilities, not post-hoc reconstruction. This is especially critical under CSDDD, which makes parent companies liable for supplier violations.
Scenario planning allows retailers to model disruptions instantly. What happens if a company’s primary steel supplier gets added to the UFLPA Entity List tomorrow? Instead of spending weeks analyzing options, it can make informed decisions within hours
Building Scalable Compliance Infrastructure
Scaling compliance doesn’t mean hiring more auditors. It means building intelligent systems that handle complexity automatically.
Start with digitization. Convert paper certificates and spreadsheets into structured, searchable data. Implement automated regulatory monitoring for critical markets. Establish centralized compliance documentation with automated expiration tracking.
Integration comes next. Compliance systems must connect with product lifecycle management platforms, supplier portals and quality management systems. This eliminates manual data entry and ensures compliance considerations inform decisions at every stage.
Supplier collaboration is critical. Leading retailers provide suppliers with tools and training rather than simply mandating compliance, creating shared accountability throughout the value chain.
Companies implementing intelligent compliance infrastructure benefit from significant reductions in late-stage failures and port detentions, substantial decreases in manual tracking time and notably faster response to regulatory changes.
The Path Forward
The regulatory landscape has fundamentally shifted. What worked in 2020 — periodic audits, manual tracking, reactive problem-solving — is no longer sufficient. The July 2026 ACE mandate, expanding EPR requirements and CSDDD liability create an enforcement environment in which non-compliance carries existential risk.
Can retailers prove compliance across all supply chain tiers within one hour of a CBP request? Do retailers know which SKUs contain materials from UFLPA high-priority sectors? When a new regulation passes, can they identify affected products in minutes instead of weeks?
Retailers answering yes aren’t firefighting anymore. They’re building competitive advantages through intelligent compliance. The question isn’t whether to modernize compliance but whether to lead or follow, whether to build proactive capabilities before regulators and competitors compel it.
For hardlines retailers, compliant supply chains are a competitive advantage. Non-compliant ones are existential risks.
Shreyas Shetty is VP of Sales and Account Management for Hardlines and Grocery at Inspectorio, a leading platform for quality, compliance, sustainability and traceability throughout the supply chain.
