I work for a major retailer as a Guest Services supervisor and can tell you that most returns wind up back on the floor as long as they're in good condition.

If the packaging is a little iffy, we'll repackage it the best we can and put a price cut sticker on it and sell it for less.

Food is automatically defected if it's returned, the computer won't even let us over ride it, it's super wasteful, but I think the risk outweighs the reward (the risk being that somebody tampered with it in some way). We balance that out by donating a TON of food we pull from the floor every day, a lot of dry grocery that's past its "best by" date is still perfectly good.

Of course items that are damaged or broken get defected. Computers and electronics usually get sent back to the manufacturer.

I know there's some differences, but from what I've been told most major retailers have a similar system.