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The message to shoppers: We’re sorry you didn’t want your freebies, but we don’t either.
Ohen a buyer tried to return a Samsung soundbar she bought on sale at Walmart on Black Friday, the retailer asked her to please keep the item, even if issuing a full refund.
This is what we have come to.
Even when retailers agree to remove rejected gifts from customers’ hands, they are more likely this Christmukkah season to demand that shoppers pay for return and restocking costs 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 either.
Even if retailers never like picking up the tsunami of things that returned after the holidays, they have reason to be significantly less excited this year. They have worked hard in recent months to empty stores and warehouses overflowing with excess inventory, as consumer preferences rapidly shift away from furniture, loungewear and other pandemic-era favorites. Retailers turned to huge markdowns to get rid of these products, which squeezed profit margins.
The boom in holiday returns will only make matters worse. According to the latest data from Appriss Retail and the National Retail Federation, Americans are expected to return about 18% of the items they purchased during the holiday shopping season this year, or about $171 billion worth of products. 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 major retailers process returns. According to Narvar, a returns management company, 41% of retailers now charge return postage, up from 33% last year. Many also add a restocking fee.
Another tactic gaining traction is to simply let customers keep the items while issuing a refund. This way, retailers will never have to revisit merchandise again. So-called refunds without return reached $4.4 billion in 2021, according to Alix Partners. Around a quarter of retailers now employ the strategy in some way, according to goTRG CEO Sender Shamiss, who estimates the figure is up from around 10% previously.
“I’ll tell you why it happens – it comes down 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 the shelves and ship it again, there’s nothing left.”
Retailers began to restrict liberal return policies ahead of the holiday season, attempting to retrain shoppers they’ve encouraged for years to spend and return freely. Many shoppers have become accustomed to buying multiple sizes of a garment, for example, with the intention of returning ones that don’t fit.
“It’s not that retailers are stingy,” Shamiss said. “It’s just not a sustainable business model.”
Reducing the cost of returns has been a top goal for many retailers this year, said Jonathan Poma, CEO of Loop Returns. To stay on trend, Poma refocused his company’s marketing to focus on how he could help retailers save money now. He had previously focused on future growth.
Sometimes that means Poma helping retailers decide which items aren’t worth picking up. The most obvious example? Cheap products, where the cost of shipping and restocking can quickly exceed the value of the item.
“The juice might not be worth it,” said Marcus Shen, CEO of B-Stock, which helps retailers like Walmart, Target and Amazon liquidate returned items. He noticed a drop in the number of items worth less than $20 that retailers are trying to offload, suggesting shoppers are increasingly being told to keep only those items.
Bulky goods are also deserted, as they are very expensive to ship. Shoppers are urged to save seasonal items like winter coats and Christmas decorations that are hard to resell months later, as well as bedding, underwear and cosmetics that cannot be put back on the shelves for health reasons.
To make sure people don’t abuse return policies, retailers are paying closer attention to a customer’s purchase history, measuring how often they buy, how much they spend, and how much they spend. frequency it makes 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 don’t take advantage of these policies,” said Nathan Smith, senior vice president of product at Appriss Retail.
Loyalty members can enjoy special benefits while making vacation returns. Miguel Acevedo, 27, gets a free return on a pair of crimson Nike Air Jordan 5s designed with DJ Khaled that he bought as a Christmas present for his father-in-law, a fan of the musician. He bought them in a hurry because he feared they would sell out, but when they arrived his wife and mother-in-law thought the pinkish color would be a waste.
Not serious. He’s a frequent shopper and a member of Nike’s loyalty program, so he gets free returns. Those who are not part of the loyalty program must pay the return costs.
“Not everyone makes the same purchases, so not everyone should return the same,” Smith said.
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