The Gifts That Go Back: The Numbers Behind Holiday Returns

With holiday gift shopping in full swing, retailers can count on plenty of returns. Gifts of ill-fitting sweaters and duplicate games ensure that returns will be a popular sight in the weeks following the holidays.

Challenges For The Retailer

For retailers, returns can make the holiday shopping craze trickle into the new year. According to Optoro, consumers return about $380 billion worth of goods each year, $90 billion of which is processed during the holidays.

Seventy-five percent of returned items were clothing and accessories in 2017. Next most were shoes and following close behind was electronic items. Gifting clothing is a risk because sizing can be difficult to measure. Stores like Anthropologie and Nordstroms will be swamped with sizing exchanges. This can lead to customer dissatisfaction, because often after the holidays inventory is thin and sizes are not readily available.

Inventory management is crucial in order to stay afloat during this busy season. If items are mistakenly left untagged or misplaced upon return, then the product cannot be resold. The only way to turn a profit on the product is by making sure all items are organized and categorized immediately after each return.

Benefits For The Retailer

According to the National Retail Federation, sales during December of last year increased 5.5 percent as compared to the same period in 2016. According to RedStag, “Holiday sales came in at almost $692 billion as stronger employment and growing wages led to higher purchasing confidence, and therefore, more spending.”

Returns bring in many new customers who would not regularly shop at a particular retailer. The desire to exchange an item gives retailers opportunities to introduce their products to new clientele.

Another benefit is that many retailers will make a profit out of returns if there is proper inventory management. Return expense can range from 20-65 percent of the cost of sold goods. If the product comes back in sellable condition, then the company can make money off the return.

Some stores are adjusting their policies to help with holiday returns, including Apple. “Under the policy, eligible products purchased between November 14, 2018 and December 25, 2018 can be returned until January 8, 2019 in the United States, Canada, Australia, United Kingdom, and select other regions.”

This extended return rate may encourage customers to find a more desirable product, or make an additional purchase, and improve their shopping experience.

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