As Holidays Wrap Up, Retailers Face More Discounts, Gift Returns

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

Companies hope post-Christmas returns and discounts will slim down excessive inventories 

Despite the fact Christmas has come and gone, the holidays haven’t yet ended for retailers. Following Christmas Day, stores were preparing for the streams of people coming back to return unwanted gift items for, hopefully, more items. This year, stores were opening their doors early and offering even larger discounts to cater to what ShopperTrak predicts will be this year’s fifth-largest, after-holiday crowd to hit stores.

The six-day period after Christmas is just as important for retailers as the month preceding Christmas. One analyst, Marshal Cohen for The NPD Group says, “Retailers really need this time period to rid themselves of all the merchandise they don’t want to carry by the middle to the end of January. They need to get ready for next season and the next year, so they need the post-holiday business to clear out all the things they thought they would sell that they didn’t sell.” And indeed, returns draw people back into stores, heightening the possibility they’ll return the one item and buy two more. Too, there is always the chance a customer will be returning a gift to a store they’ve never visited. If that’s the case, stores that treat these customers well could earn some return customers in the new year.

Because of a slower Black Friday rush and a 3.1 percent decline in revenue on the Super Saturday sales right before Christmas, stores are most likely grappling with larger-than-desired inventory levels. The answer to excess inventories this year is continued discounts. As Cohen says, retailers are “now in inventory management mode rather than sales growth mode.” However, regardless of discounts, many bricks-and-mortar chains will most likely have to send their remaining inventory to processors, such as Liquidity Services. Retail consultancy Kurt Salmon estimates that nearly 1/3 of online purchases get returned to retailers.

Best Practices In Inventory Management: It Starts With Planning

In order to cut down on the amount of returns e-retailers have to deal with, some are implementing new strategies to help customer ensure they make better purchases the first time around. For instance, some retailers are trying out programs that give customers access to their purchase history and that prompt them with notes about their sizing history on certain, previously purchased items. Other companies like Nordstrom and Macy’s are using analytics to help show customers how clothing and shoes will fit them in real life. Amazon even offers customers gift cards or discounts to encourage customers to keep products they might have been planning to return.

Free shipping and returns for online goods have encouraged more and more people to venture into the online realms to make purchases. However, as the online channels see more customers, they’ll also encounter more costly returns. Indeed, one retailer Rue La La says returns cost the company $5 million last year. Considering the holiday season is already discount-heavy, and return fraud is expected to cost retailers $3.4 billion this holiday season alone, companies really don’t have a lot of room for excess returns.

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