Industry Trends

Merchandise Returns: Effects on Retailers

3 min read

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Consumers spend more and more time at home with their internet browsers bringing retail comfort.
As online shopping is making a comeback. Retailers have loosened return policies to adhere to the restrictions consumers are facing. There have been mass difficulties with returning items in stores and traveling to and from the post office.

“Optoro, a Washington, DC-based startup that helps retailers including Target, Best Buy, and Ikea manage their returns processes, recently conducted a survey of 2,000 US consumers about their return habits while staying at home. More than one in three said they were holding on to at least one return while stores were closed.” [i]

Experts say that there will be a huge surge in merchandise returns. Some even say close to that of what you would expect after the holidays. [i] What effect is this going to have on retailers and their inventory? At the beginning of the pandemic, retailers struggled with keeping things in stock. Now they are facing what their inventory is going to look like overstocked. Retailers are facing issues such as how to process clothing and other items that may have been in people’s homes for extended periods of times.

Can these items be reused? How much loss should retailers account for? With the ever changing climate of this pandemic, businesses must stay on their toes to anticipate consumer purchases. They must also worry about how that affects business in the long run. Retailers like American Eagle Outfitters have created bins for a “touchless” return process in stores. With their clothing items remain out of circulation for 72 hours before being steamed and returned to the floor. [i] Will this process change with time as COVID progresses/digresses?

“As part of our comprehensive reopening plan, we worked with medical experts to create a seamless and efficient process which helps to ensure the health and well-being of both our store associates and customers,” McLean said. [i]

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The biggest challenges for retailers as stores begin to open back up are trying to resell returned merchandise. They are also having trouble finding the workforce to handle and process returned items to be brought back on the floor. [ii] Typically, 17% of apparel is returned to retailers. With the workforce shrinking significantly retailers will struggle to balance their workforce with product returns. The typical American cut back spending significantly at the beginning of the COVID pandemic. But as retailers adapted with their shipping policies, return policies, and safety in warehouses and distribution centers to ensure the sanitation and safety of their products being shipped out, consumers are beginning to spend money again.

How long will it last? What if a second wave comes in the fall? How will this impact retailers who are still recovering from the impacts of the first wave?

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“I could see some rejection criteria potentially getting more stringent about what will be resold versus donated, but I don’t think those decisions behind the scenes will be visible to shoppers,” Happy Returns’ Sobie said.” [ii]

Is it safe for retailers to allow for product returns/reuse? How soon is too soon to go back to normal? Although retailers seem to be half and half on return policies, there’s still one goal in mind from retailers across the country. How can we continue to make our customer happy? As if retailers aren’t already taking a hard-enough hit. This just might have to be another blow.

There is one thing we do know: customers are more likely to enter into stores with high safety precautions: mandatory masks, hand sanitation stations, round the clock cleaning of the facilities, as well as placing importance on a safe, well lit, well powered space to sell their goods. That’s where Rogers Electric comes in. We are the nation’s leading facility service provider for all of your Electrical, Lighting, Construction, HVAC and Plumbing needs. We’re here to help. Head on over to Our Work to check out some projects we’ve previously worked on.