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The message to shoppers: We’re sorry you don’t want your gifts, but we don’t want them either.
When one shopper tried to return a Samsung sound bar she bought on sale from Walmart on Black Friday, the retailer asked her to please keep the item, even while issuing a full refund.
This is what it’s come to.
Even when retailers agree to take rejected gifts off customers’ hands, they’re more likely this Christmukkah season to require shoppers to pay for return shipping and restocking than in the past.
It’s all part of the same message to shoppers during the post-holiday return rush: We’re sorry you got something you don’t want, but we don’t want it either.
Even though retailers never enjoy taking back the tsunami of things that get returned after the holidays, they have reason to be distinctly less excited this year. They’ve worked hard in recent months to clear out stores and warehouses bursting with excess inventory, as consumer preferences shifted rapidly away from furniture, loungewear and other pandemic-era favorites. Retailers turned to huge markdowns to get rid of the stuff, putting a dent in profit margins.
The holiday returns boom is only going to make things worse. Americans are expected to return about 18% of the items they purchased over the holiday shopping season this year, or about $171 billion worth of stuff, according to the latest data from Appriss Retail and the National Retail Federation. The busiest day for returns is January 2, earning it the title of “National Returns Day” from UPS.
In an effort to mitigate costs, about 60% of retailers are tightening their return policies, according to goTRG, a company that helps Walmart, Sam’s Club and other large retailers process returns. Forty-one percent of retailers are now charging for return shipping, up from 33% last year, according to Narvar, a returns-management company. Many are also adding restocking fees.
Another tactic gaining traction is to just let customers keep items while at the same time issuing a refund. That way retailers never have to see the merchandise again. So-called returnless refunds hit $4.4 billion in 2021, according to Alix Partners. Roughly one-quarter of retailers are now employing the strategy in some way, according to Sender Shamiss, CEO of goTRG, who estimates that the figure is up from about 10% previously.
“I’ll tell you why this is happening — it comes back to cost,” said Narvar CEO Amit Sharma. “By the time they spend the money to bring it back, process it, inspect it, put it back on shelves and ship it again, there’s nothing left.”
Retailers began reining in liberal return policies ahead of the holiday season, attempting to retrain shoppers who they’ve encouraged for years to spend and return freely. Many shoppers have become accustomed to buying multiple sizes of a piece of clothing, for instance, with plans to return the ones that don’t fit.
“It’s not that retailers are being stingy,” Shamiss said. “It’s just not a sustainable business model.”
Bringing down the cost of returns has been a top objective for a lot of retailers this year, said Jonathan Poma, CEO of Loop Returns. To stay on trend, Poma shifted his company’s marketing to center on how it could help retailers save money now. It had previously focused on driving future growth.
Sometimes that means Poma is helping retailers decide which items aren’t worth getting back. The most obvious example? Inexpensive products, where the cost of shipping and restocking can quickly surpass the value of the item.
“The juice might not be worth the squeeze,” said Marcus Shen, CEO of B-Stock, which helps retailers like Walmart, Target and Amazon liquidate returned items. He has noticed a decline in the number of items valued at under $20 that retailers are trying to offload, suggesting that shoppers are increasingly being told to just keep those items.
Bulky merchandise is also being deserted, since it’s so expensive to ship. Shoppers are being told to keep seasonal items like winter coats and Christmas decorations, which are difficult to resell months later, as well as bedding, underwear and cosmetics that cannot be put back on shelves for sanitary reasons.
To make sure people aren’t abusing return policies, retailers are paying closer attention to a customer’s purchase history, assessing how often they shop, how much they spend and how often they make returns. A good customer is more likely to get better return options than a bad or infrequent customer.
“There’s a balance here to make sure people aren’t taking advantage of these policies,” said Nathan Smith, senior vice president of products at Appriss Retail.
Loyalty members may get special perks while making holiday returns. Miguel Acevedo, 27, is getting a free return on a pair of crimson Nike Air Jordan 5s designed with DJ Khaled that he bought as a Christmas gift for his father-in-law, who’s a fan of the musician. He purchased them in a hurry because he was worried they were going to sell out, but when they arrived, his wife and mother-in-law thought the pinkish color would be a turn-off.
No big deal. He’s a frequent shopper and a member of Nike’s loyalty program, so he gets free returns. Those who aren’t part of the loyalty program have to pay for return shipping.
“Not everyone shops the same, so not everyone should return the same,” Smith said.
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Source: https://www.forbes.com/sites/laurendebter/2022/12/26/retailers-really-really-dont-want-your-holiday-returns-this-year/