Retailers are already gearing up for a huge comeback season

The holiday season is still in full swing, but retailers are already bracing for an influx of returns at the end of the month – and it is expected to be larger than in previous years.

Nearly a year after the start of the pandemic, in-store dressing rooms and makeup testers have become nearly obsolete, leaving shoppers to try on clothes and products at home with the intention of returning whatever they want. they don’t want to keep. While this is convenient for shoppers, it is a growing problem for retailers who have to deal with – or throw away – unwanted products.

“Each year, as e-commerce grows, [returns were] becomes a bigger problem, ”said Praveen Adhi, head of retail operations for the Americas at consulting firm McKinsey. “Then in March 2020 there was a giant change and all of a sudden retailers had no choice but more and more people started buying online and stayed buying online. It has become too important a part of the business to be ignored.

Online shopping sales are expected to reach $ 207 billion this year, a 10% increase from 2020, according to Adobe’s Digital Economy Index. But with out-of-stock issues and supply chain constraints, shoppers are buying whatever they can get their hands on for fear their gifts won’t arrive in time for the holidays, said Sender Shamiss, CEO of logistics company goTRG. NBC News in an email.

Between Thanksgiving and the end of January, $ 120 billion in merchandise is expected to be returned, according to reverse logistics technology company Optoro. This is an increase of about 4% from the $ 115 billion last year, he said.

This year, shoppers are expected to report 30-40% of online purchases.

“The focus on returns has definitely stepped up,” said Bill Inzeo, global retail technology strategist at Zebra Technologies, a retail technology company. “Retailers are looking for ways to direct customers to solutions to help them align their thinking with returns. “

Sizing and virtual reality technology, aimed at reducing returns before a buyer makes a purchase, is still nascent when it comes to shopping online. In March, Snap Inc. expanded its e-commerce business with the acquisition of Fit Analytics, a virtual reality company that helps shoppers choose the right size clothing when shopping online. Walmart closed its virtual reality e-commerce subsidiary last year after just two years. Gap Inc. recently acquired adjustment technology company Drapr in August to tackle the issue of returns.

“When we look at our returns, the number one reason people return a product is because it doesn’t fit,” Gap CFO Katrina O’Connell said on a September earnings conference call. . “So being able to take advantage of the technology that Drapr brings to be able to create a better fit experience, we think that will show up in our rate of return. “

But as the adoption of these technologies progresses, companies are working on new ways to combat bracketing, where buyers purchase a range of sizes or colors of a single product with the intention of returning what. they do not want. It’s a trend that industry watchers say has increased as shoppers move online. About 72 percent of shoppers who purchased multiple sizes and colors of the same item last year plan to step up this strategy, according to a recent report from brand returns company Narvar. About a third of shoppers told the company they would buy more of the same item because they couldn’t try on the items in-store.

One-third of shoppers surveyed plan to buy more of the same item because they can’t try on the items in-store.

“The rigidity of the trends persists even after stores reopen due to variation issues – people have become accustomed to the convenience of e-commerce,” said Anisa Kumar, director of customer service at Narvar. “Buyers don’t stay and don’t hang around [at a store] and 60 percent buy items and take them home with the intention of coming back.

Saks Fifth Avenue, Sephora, Bed Bath & Beyond and Levi’s all use cutting edge technology to give buyers more options to make a return through one of their own stores or through a partner store that accepts returns on their behalf. Some companies, including Cole Haan, use boxless returns, where buyers can return an item to UPS stores without a box, thereby overcoming the tedious process of finding or purchasing packaging to contain the unwanted item. According to Narvar, around 10% of buyers choose this option when making a return.

Some retailers, such as H&M and DSW, also offer tiered return policies for loyal members. For H&M Loyalty Members, the company waives the $ 5.99 return shipping charge. At DSW, loyalty members can make returns within one year of purchase.

“Return and shipping costs have increased,” Kumar said. “You can’t afford to have inventory that isn’t salable and takes longer to return and needs to mark it.”

The issue of online returns only became more urgent under the supply chain crisis that has shrunk retail shelves, Shamiss said. Prior to supply chain safeguards, goTRG resold returns in secondary markets, which could increase the resale value of items. Now, however, he’s repackaging return items back into a retailer’s supply chain to meet consumer demand and fill inventory, he said.

“You need to get these returns back into your inventory base as quickly as possible,” Kumar said.

The return window for items has also widened with the rise of e-commerce. Macy’s spokeswoman Sheikina Liverpool told NBC News in an email that most items purchased online or in stores from October 5 will be accepted for return until January 31 to offer a additional flexibility to customers shopping throughout the holiday season. Kohl’s Holiday Return Policy allows buyers to return items within 180 days, excluding electronics.

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