Retailers may be rubbing their hands together in glee that this year’s peak period is set to deliver strong results, but for many, there will also be a sense of trepidation that the New Year will see a significant portion of those items returned.
Last year, the National Retail Federation found 11 per cent of all holiday sales would be returned for a variety of reasons, with some more legitimate than others.
Here’s an insight into the rising tide of returns, and the top strategies retailers can employ to minimise risk.
An increasing trend
A number of recent reports have illustrated the increasing trend of returns. And in an internet age where customers are set to make more of their holiday purchases online this year, it only stands to reason.
Online purchasing means many consumers do not have had the opportunity to sight, touch or feel an item in person and in the case of apparel they have not had the chance to try that item on. Retailers often seek to accommodate by offering the option of easy and convenient returns in a bid to lure customers in.
Meanwhile, the post-holiday season sees a bump in returns as gift recipients and gift-givers exchange or return unwanted items.
Holiday return stat’s
In 2018, the National Retail Federation found retailers anticipated 10.6 per cent of all annual sales are returned with holiday sales seeing that increase to 11.1 per cent.
Erring on the side of caution, data firm APPRISS put a conservative dollar figure on that amount. Working on a 10 per cent return rate, they noted the value of returns in 2018 equated to $369 billion, while holiday sales returns would be worth approximately $72 billion.
Interestingly, online returns are also impacting bricks and mortar, with the NRF noting many retailers reported seeing more online purchases returned to physical locations, with 37.9 per cent reporting increases in buy online, return in store.
The trouble with returns
Handling returns delivers a wealth of challenges to retailers. On the one hand, both bricks and mortar and online retailers wish to accommodate an increasingly fickle customer, but on the other returns can be time-consuming, resource-intensive and costly. They can also be fraudulent.
In 2018, the NRF found 8.2 per cent of all returns were fraudulent and that rose to 10.3 per cent during the holiday sales.
Meanwhile, the trend of convenient returns is also resulting in a new phenomenon known as the “serial returner”.
The serial returner
Classified as a customer who regularly buys multiple items with the intention of returning some, serial returners are increasing, according to a report by Brightpearl.
They found almost half of customers agree that they will at some point buy multiple items with the intention of sending some back, and retailers have also acknowledged an increasing problem.
In the US, Brightpearl noted 42 per cent of retailers had encountered an uplift in intentional returns between 2017 and 2018.
In May last year, Amazon introduced a lifetime ban on serial returners, in a move which was widely supported by consumers.
Blackpearl explains over a quarter of US survey respondents strongly agreed with the approach, while only seven per cent strongly disagreed and only 11 per cent said they would never shop with an online retailer who imposed this condition.
Their research also found other retailers might be willing to follow suit, with 61 per cent of US retailers saying they would ban serial returners from their website permanently, while fewer than one-quarter were not inclined to follow this approach.
But there are also other options available when it comes to handling returns, as Blackpearl notes.
- Offering clearer returns policies (supported by 55 per cent of US consumers)
- Introducing a maximum returns quota (supported by 40 per cent of US consumers)
- Limiting the time that customers have to return items (supported by almost 40 per cent of consumers)
- Introducing temporary bans (supported by over 30 per cent of US consumers)
- Limiting offers and promotions (supported by just under 15 per cent of consumers)
- Raising the price of items to cover the cost of returns (supported by just under 15 per cent of consumers)
When it comes to return-fraud, retailers also need to be clear in their return policy and vigilant when refunding items for gift cards or cash. Importantly staff should also be educated in these policies, and return numbers and instances should be regularly reviewed.