NEW YORK (Reuters) – As shoppers put their latest Christmas presents under the tree, US retailers are preparing for a record flow of online gift returns bought during the deadly rise in coronavirus cases. To make the process more efficient, retailers, including Walmart Inc and Target Corp, allow shoppers to drop unwanted gifts on FedEx or United Parcel Service delivery sites.
Others, including Best Buy, Dick’s Sporting Goods and Nordstrom, are returning to the board for the first time, as efforts to stop the spread of COVID-19 have closed stores or reduced the number of customers allowed inside.
Returns will increase this year. Shoppers looking to avoid the contagion have moved from online stores – where return rates are historically higher. Retailers are also under pressure to make the process as smooth as possible for buyers they want to keep as long-term customers, as well as for UPS and FedEx, which are flooded with packages.
Even some malls are moving to facilitate the return of their tenants. Mall of America and Simon Property Group have both partnered with Narvar, a return management provider, to eliminate the need for buyers to print return labels for the packages they submit.
The National Retail Federation expects holiday sales in 2020 to grow by up to 5.2% from last year to $ 766.7 billion. About 13 percent of the goods, or about $ 101 billion in goods, sold in the 2020 holiday season will be returned, the trading group said.
Optoro, which helps retailers sort, resell and dispose of returned goods, puts the number even higher. He predicts that returns from the US holidays in 2020 will reach $ 115 billion between Thanksgiving and the end of January. This is up 15% from the company’s 2019 forecast, which includes UPS and IKEA home furniture retailer among its investors.
The clothing return rate in the store is 5-8%, while online runs around 30%, said Rob Zomok, president of global operations at Inmar Intelligence, which processes approximately 600 million retail returns and annual e-commerce.
“This math has created a significant increase in yields,” said Zomok, who added that clothing yields are at a record high.
“When your shopping is 100% online, you’re probably ordering a few extra items with the intention of returning,” said Sriram Sridhar, chief executive of LateShipment.com, which helps customers track packages.
“We expect every retailer to face about 50% more profitability than they did in previous years during the holiday season,” Sridhar said.
Moreover, retailers also quarantine or sanitize products after they are returned to ensure they are virus-free.
“This is not the typical way to process returns,” said Paula Rosenblum, general partner at retail research firm RSR Research.
Kohl’s, which collects Amazon.com returns and sends them in bulk back to the e-tailer, has extended its own term for premium electronics.
It joins a large number of retailers, including Walmart, Macy’s and Amazon, which give buyers more time to return purchases – a move that could make it more difficult to resell seasonal goods.
Getting these products for resale is vital – especially for fast fashion retailers who sell fashionable clothing, Zomok Inmar said.
“The window will be short,” Zomok said.
Reported by Anna Driver; Edited by Aurora Ellis