It's buyer's remorse big time this holiday season. Shoppers are again expected to return a large chunk of the holiday gifts they bought this year before the gifting even takes place, and some of that problem may be self-inflicted by retailers.
Liquidation.com, which buys returned merchandise from traditional retailers and auctions it to bargain-bin stores, says return rates are 12 percent to 15 percent this holiday season so far, two percentage points higher than last year and double the rate in better times, according to an article in the Associated Press.
According to the National Retail Federation's Return Fraud Survey of 103 retailers taken in October, 9.94 percent of holiday items are expected to be returned this year on average for the entire season. That's slightly up from 9.8 percent in 2010 and notably above the 8.77 percent rate seen in 2007.
For retailers, the costs of returns include receiving, assessing, repairing, re-boxing, restocking and reselling returned products. Further, additional markdowns may be involved if the item is returned later in the season or after Christmas.
According to the AP report, one reason customers appear to returning more items early is due to the down economy.
"When the bills come in and the money isn't there, you have to return," Jennifer Kersten, 33, of Miami told the AP. She spent $300 the day over the Thanksgiving weekend on gifts for her nephews only to return half of it the following week.
The article stated that shoppers are "binging on big discounts" in the excitement of the many deals found across retail, only to eventually face "buyer's remorse" at home after re-assessing their budgets. Stores are also apparently undercutting one another with customers returning items bought at one retailer after discovering a cheaper price elsewhere. Finally, friendlier return policies are said to be part of the problem.
Accenture believes making sure customers are happy with the purchase before they leave the store would dramatically reduce return risks. According to a survey of executives from communications carriers, consumer electronics retailing and consumer electronics manufacturing companies, only 5 percent of returns are related to actual product defects. Twenty-seven percent reflected "buyer's remorse" with 68 percent of returned products ultimately characterized as "No Trouble Found."
"Most companies invest considerable sums to manage returns, but need to refocus their strategies on proactively preventing returns through customer education and aftermarket support," said Mitch Cline, managing director of Accenture's Electronics & High-Tech group, in a statement.
- From Black Friday to back Monday: Stores are seeing huge returns, but not the kind they want - Associated Press
- Return Fraud Survey - National Retail Federation
- Returns and Repairs Services for the Electronics and High Tech Industry - Accenture
- U.S. Consumer Electronics Industry Faces a Projected $17 Billion Product Returns Bill This Year, Accenture Research Finds - Accenture