Buyer remorse, wardrobing, criminal activity and a number of other factors will result in consumers returning a record $219 billion in merchandise this year, according to a new survey released by the National Retail Federation (NRF).
According to the NRF, merchandise returns will account for 8.7 percent of total sales in 2008 compared to 7.3 percent last year.
Fashion retailers are particularly susceptible to buyer remorse syndrome, according to Marshall Cohen, chief industry analyst for The NPD Group. "Fashion is a feel-good purchase that sometimes doesn't feel so good once you get it home, and that's what makes it so vulnerable," he told The New York Times.
Howard Davidowitz, chairman of Davidowitz & Associates, said, "Consumers are trading down massively; they are out of money, and that's where returns come in. When times are terrible, they look for ways to cut back."
Candace Corlett, a partner in WSL Strategic Retail, said that items in the past that weren't worn may have stayed in the closet but now they're being returned. "Returns are the newfound cash, the new savings account," she told the Times. "Everything you take back, you are presumably putting in your piggy bank."
Of course, dollars going back into consumers' piggy banks are flowing directly from retailers' coffers. Even with that, 52 percent of retailers told the NRF their return policies will be more lenient this year than last.
"In a year where practicality is paramount, many retailers are making return policies more flexible for customers who need to bring back duplicate or unwanted gifts after the holidays," Joe LaRocca, vice president of loss prevention for the NRF, said in a press release. "Retailers seem to be finding a balance between providing good customer service to shoppers while preventing criminals from taking advantage of lenient policies."
Discussion Question: What will record product returns mean for retailers and for customer service? Do you recommend different policies for different product categories, e.g. apparel vs. electronics?