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Retailers enforce stricter return policies ahead of the holidays

The holiday shopping season is always closely followed by a spike in gift returns.

But this year, it may be harder to get things back for free or at a reduced price.

tentative 60% of retailers According to a recent survey of retail executives, they said they are changing existing return policies, with less promising free returns.

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According to the most recent data from the National Retail Federation, retailers are expected to return about 18%, or $158 billion, of merchandise sold during the holiday shopping season.

Overall for 2021, the rate of return was approximately 16.6% of total US retail sales, or $761 billion in returned goodsAnd in 2022 very few businesses are in a position to be able to afford such a huge price.

According to Spencer Kieboom, founder and CEO, as margins shrink due to rising costs, many retailers are rethinking their return policies, shortening return windows and even charging return or restocking fees. are doing. Parag Returns, a return management company.

Short return window, expect restocking fees

A letter carrier holds an Amazon.com package while preparing a vehicle for delivery at the United States Postal Service Processing and Distribution Center in Washington, DC

Andrew Harrer | Bloomberg | Getty Images

Gap, Old Navy, Banana Republic and J.J. Crew (which was once known for having a generous return policy that extended the lifetime of a garment) has shortened its regular return window to under a month. However, some relief is being offered to end-of-the-year shoppers: J. Crew and others are currently offering extended holiday returns and exchanges.

At Anthropologie, REI, and L.L. Bean (which also promises one-time lifetime returns), there is now a fee — about $6 — for mailed returns.

“These adjustments to return policies are not meant to cover the cost,” Kieboom said. “They’re really there to keep the consumer from returning.”

Rising costs squeeze margins

With the explosion of online shopping during the pandemic, “free returns were a high-convenience model that customers appreciated,” said Erin Halka, senior director at supply chain management company Blue Yonder. Now, with higher labor and shipping expenses, it’s costing retailers “a tremendous amount of money” to retain, she said.

“Charging for returns is one way to cover a portion of that cost,” she said. “It may also deter customers from over-purchasing, as at least 10% of returned goods cannot be resold.”

As retailers struggle with excess inventory, “often the returns don’t end up back on the shelf,” and this poses a problem for retailers streamlining expenses and increasing sustainability, Kieboom said.

Supply chains are designed to move in one direction.

lauren beetlesparker

Associate Professor at Babson College

“The supply chain is designed to go one way,” said Lauren Beitelspacher, associate professor and chair of the department of marketing at Babson College.

“The more money retailers lose in returns, the more they have to compensate by raising prices,” Beetlespercher said.

“Changing the return policy is an easier pill for the customer to swallow than increasing the purchase price.”

How to Avoid Return Fees

Still, shoppers love free returns almost as much as they love free shipping. In fact, 98% of consumers said free shipping was the most important consideration when shopping online, followed by more than three-quarters of free returns. PowerReviews reports, Affluent shoppers were even more likely to favor a free-return policy.

Experts say that if the return option is important, know the policies before you buy. Often, it’s not immediately apparent, Halka said. “You generally have to dig into the fine print.”

Expect limits on what can be sent back and when, she said. “The 30-day window is now typical.”

That’s time well spent in terms of making the best possible decision on your purchase. “You have to find the return policy that works best for you,” Kieboom said.

For those looking to avoid returns altogether, shopping in person might be the way to go, Beetlespatcher suggested. “Most returns come from regret because it’s not what we expected. Shopping in person narrows that expectation-reality gap,” he said.

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