Surge in online gift shopping makes returns and exchanges a bigger deal this year – The Dallas Morning News
Like everything else about shopping, COVID-19 is leaving its mark on the post-holiday return season, making it bigger, changing when it happens and maybe even what’s being returned.
More online shopping this holiday season – a whopping 30% more than last Christmas – is expected to translate into a record number of merchandise returns. And while apparel – in the wrong size, color or style — has historically been the biggest category for returns, less of it was purchased this holiday season.
Apparel sales declined 19.1% year-over-year during the extended holiday season starting in mid-October through Dec. 24, according to Mastercard Spending Plus, which tracks spending across all payment types, including cash and check.
To understand returns, Inna Kuznetsova, CEO of 1010data, said she looks at how consumers’ behavior changed, what people are buying more of and less. The big jumps in spending online and in stores for groceries, consumables like paper towels and seasonal items like strings of Christmas lights aren’t going to be returned.
On the other hand, apparel returns were already lower this year than in 2019 because people purchased “easy to wear clothing” with less of a chance to be returned and athletic shoes they already know fit, Kuznetsova said. Apparel returns dropped to 13.5% of purchases through October versus 17% for the same period of 2019. Footwear returns declined to 19% from almost 30% in 2019, she said.
Returns have become a bigger issue with the explosion of online shopping, which by some measures will be almost 20% of this year’s share of holiday spending. E-commerce as a percent of total retail sales surged during the pandemic, jumping to 16.1% in the second-quarter when stay-at-home orders were widespread and 14.3% in the fall quarter. That compared to e-commerce’s 11% share of total retail sales before the pandemic.
Retailers have been trying to lower their returns with technology and by analyzing data. It’s an expensive cost of doing business with free shipping expected by consumers on goods that lose value in the process.
It’s becoming a bigger concern, experts say, as online sales have a 15% higher rate of returns.
Startups are trying to offer solutions to apparel returns and one with such aspirations is up and running at Stonebriar Centre in Frisco and Oakbrook Center in Chicago.
Fit:Match popup studio, located on the lower level at Stonebriar near Nordstrom, is using 3D and artificial intelligence-powered technology to take body measurements and input preferences.
The point is that shoppers can then use that information to make online purchases of clothing that fits, said Haniff Brown, founder and CEO of Fit:Match, a startup based in Florida. The firm has signed up several retailers, including Vineyard Vines and Express.
The service is free to shoppers and Fit:Match makes a commission when customers make a purchase through its website, similar to how influencers are compensated.
By some estimates, apparel returns are a $100 billion a year problem for retailers, Brown said. And it’s compounded by supply chain logistics and customer care costs.
“People also underestimate the degradation to a brand caused by fit-related returns,” he said.
Returns may be slower to get back to retailers this year as many consumers aren’t dropping off merchandise on their way home from work and others have to figure out how to ship instead of walking returns back into stores.
A peak day for online returns has historically been Jan. 2 and this year UPS said it expects to process a record 1.9 million returns, up 26% from a year ago. It’s predicting the surge assuming Americans didn’t rush back to physical stores to make returns during the pandemic.
Before the season started, commercial real estate firm CBRE and Optoro, a firm that helps retailers manage returns, forecast a record amount of merchandise valued at $70.5 billion will be returned this holiday season.
That’s a 73% increase over the prior five-year average, which the firms said is due to a historic rise in pandemic-driven e-commerce.
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Published at Tue, 29 Dec 2020 17:05:32 +0000