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

PUBLISHED BY Katie Perry

View all posts by Katie Perry

Related Posts

Technology

Bill Murphy Keynotes Upcoming Data and Technology Virtual Assembly!

It’s almost time for our Digital Enterprise CIO and Data Transformation Virtual Assembly, and we have some very exciting news to share. Bill Murphy, Former Senior Managing Director and CTO at Blackstone, is set to kick off the event as our Featured Keynote Speaker! Bill Murphy is a true technology expert who led Blackstone’s Innovations […]

Marketing , Retail , Technology

You’ve Uncovered the Weak Spots in Your Omnichannel Approach: Now What?

The COVD-19 crisis fundamentally changed the ways companies interact with their customers. Over a very short period of time, the traditional channels organizations used to communicate and transact with customers before the pandemic evaporated or changed dramatically. Any channels that relied on direct face-to-face interactions became at least temporarily unavailable. From in-store shopping to in-home […]

Marketing

Denise Lee Yohn Asks, “Who Owns Culture?”

As originally published by Denise Lee Yohn on Linkedin. A couple of people have recently posed to me the question, “Who owns culture in an organization?” On the one hand, it seems that everyone owns the culture – meaning, everyone plays a role in manifesting it. But on the other hand, the adage “if everyone is […]

Digital

Digital Workplace Transformation: Understanding and Improving Employee Experience

If you’re responsible for creating a digital workplace experience that supports the long-term success of both the business and the workforce, then you deserve a medal – that’s no easy task. To help take a little of the stress and uncertainty off your plate, Workgrid has put together a guide that details: The digital workplace challenges companies […]

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

Interested in Millennium Membership?
Find out if you qualify here.

arrow