High Retail Discounts May Lead to High Returns

The global pandemic, COVID-19, has greatly affected the U.S. economy, as many businesses are trying to stay afloat and find ways to bring in revenue. The retail industry is one major example.

As many retail stores shut their doors in March, and people all over the country stayed home to quarantine, online shopping began to increase. To compensate for an expected decrease in sales, many brands started offering online sales. Discounts for some retailers are so great, many are comparing it to Black Friday or Cyber Monday. Companies such as Adidas began offering 30% off for their entire site, as well as Levi’s at 40% off. Nordstrom had a sale on clearance items with some pieces marked at an additional 60% off. Shoppers are more likely to impulse buy with discounts so high online. 

Another additional perk retailers have added for their customers is extended time to return items. Gap announced any purchase made from January 1 to March 31, 2020 can be returned up until July 1. Sephora extended its typical 30-day return window to 60 days. So while these discounts and larger return windows are great for buyers, they have created a higher risk for loss for the retailers. 

Americans returned about $400 billion in merchandise in 2018, with Optoro estimating $100 billion worth of returned goods in the US during the last holiday season. Online returns are 25% of gross US retail sales, while traditional store returns are 9 percent, according to Forrester.

During normal times, according to Forrester, shoppers return around 40% of what they buy online. Sucharita Kodali, a Forrester retail analyst, says retailers can incur up to $10 per item from online orders

“We are thinking of COVID as another Black Friday for returns — after the market opens,” says Eduardo Vilar, founder and CEO of Returnly.

It is likely that many shoppers will feel a bit hesitant to shop inside stores once restrictions are lifted and retail stores reopen, so there may not be a rush in to return. Although, due to the extended return windows, people may want to go out and get their money back.

Additionally, retail stores may face a larger financial loss from returned merchandise than usual due to the virus and the way it spreads. It’s highly likely that many shoppers will not want to buy items that have been handled and returned by other shoppers because the virus can remain on surfaces. For some retail stores, it may be possible to wipe down and sanitize the returned merchandise, but for items such as clothes, it can be more tricky.  And although stores may promise items have been sanitized, convincing shoppers that is true, may be tough, which would leave numerous items as waste. 

So what’s the solution?

Unfortunately, there is not yet one. Much like how many researchers were unaware of the extent to which this pandemic would affect enterprise before it hit, there is little data to show what will happen when restrictions lessen and the country begins to resume normal activities. Retailers are bracing for the impact of returns, but hoping their sales will even out in the coming months. People may just want any excuse to go out when the restrictions are lifted!

Leave a Reply

admin

PUBLISHED BY admin

Jenny Schecher is a Client Services Director & Social Media Manager at The Millennium Alliance. Jenny is an avid contributor to our blog, Digital Diary, as well as all social media platforms. When she is not writing about digital transformation and technology, she is working with her team to make visions come to life at our events. (and eating all of NYC's best food.) Follow her on Instagram: @jennyschecs or find her on LinkedIn!

View all posts by admin

Related Posts

CMO

Is Remote Work Killing Creativity and Innovation? David Sable Shares His Thoughts

As originally published by David Sable on LinkedIn. Subscribe to the newsletter! Last week I sat in a room with a few young entrepreneurs and brainstormed. It was the first time we had all been together, in person, ever. After an hour of incredible creative productivity….sharing ideas….building on them….evaluating and starting again….the unanimous decision was […]

CMO , Retail

Innovator of the Year, Minsok Pak, Keynotes our CMO & Retail Assembly!

In our final Transformational CMO & Retail Assembly of the year, we are honored to be joined by our Keynote Speaker & 2021 Innovator of the Year Winner, Minsok Pak, EVP, Chief Strategy & Transformation Officer at Mondelēz International.  As our Innovator of the Year, Pak has demonstrated a background of digitally transforming organizations and […]

CIO , CISO , CMO , Data , Financial Services , Healthcare , Retail

Building Back Better: The Digital Diary E-Magazine

We are excited to announce that the fall edition of our Digital Diary E-Magazine, “How the C-Suite Is Building Back Better”, is out now! This edition focuses on insights from our thought leaders and advisory board members on their respective industries and how they are building back better this year. We had Michael Coates, Former […]

Healthcare

Chet Robson of Walgreens Keynotes Our Digital Healthcare & Patient Experience Assembly!

We are happy to announce that Chet Robson, Chief Clinical Officer of Walgreens, will be joining us as the featured keynote speaker at our Digital Healthcare & Patient Experience Transformation Virtual Assembly – our very last event of the year! At Walgreens, his team collaborates with roughly 70,000 healthcare professionals to deliver in-person and virtual […]

Lovin’ Digital Diary?

Premium content to our readers interested in all things business.

Check Us Out!

Millennium Membership offers Fortune 1000 C-Level executives, leading public sector/government officials, and thought leaders across a variety of disciplines unique and exclusive opportunities to meet their peers, understand industry developments, and receive introductions to new technology and service advancements to help grow their career and overall company value.

About Millenium Alliance Next

About Digital Diary

Created to provide premium content to our readers interested in all things business.

Launched in 2017, Digital Diary was created to provide premium content to our readers interested in all things business. With our blogs catered to deliver the top news stories, trends, and interviews from across all industries.

Read all story Next

Millennium Alliance Membership

Learn More Next

What does it mean to be a Millennium Member? In the midst of the constant disruption across all industries, our members are given the tools they need to digitally transform their organizations and become the best leaders they can be. Millennium Members are provided the exclusive opportunity to attend our 40+ intimate in person and virtual Assemblies, take part in industry-leading Executive Education sessions conducted by the nation’s leading academic institutions, business leaders, and technology providers and receive industry leading content through our Digital Diary Platform as well as the rapidly growing #MillenniumLive Podcast Series.