Kennedy: Retailers warned about ‘tsunami’ of returns

Research firm IHL predicts that retailers across the globe could see up to $200 billion worth of returns during the first 2 months after reopening
Kohl's in Saratoga Springs in 2018
Kohl's in Saratoga Springs in 2018

Categories: Business, News

There was a line of customers, to be sure, waiting to return merchandise at a local Kohl’s store at midday earlier this week.

And from the roped-off area I saw, the retailer anticipated demand for the service.

But reminiscent of an after-Christmas returns rush? Hardly. I was in that store post-holidays a few years back, and the returns line then wrapped half-way around the interior space.

Of course, my reconnaissance didn’t take place immediately after New York lifted a 2 ½-month ban on in-store retail activity in the region last week, and I only scoped out one retailer at one plaza in the suburbs.

So maybe the predicted returns “tsunami” was materializing elsewhere.

That was the descriptor used in a report released by research firm IHL Group to warn of the rush of returns stores might see as they reopen from the mid-March closings ordered to keep people at home to limit the spread of COVID-19.

Although stores went dark, retail sales continued online – and now all the mistakes made then in purchases could come home to roost.

“How do you survive retail overall with COVID, but how do you survive when now you have the drain due to returns that are coming in?” IHL founder Greg Buzek asked in a webinar that accompanied the report’s release last week.

Retailers faced limited revenue during the shutdown, and now the backlog of returns threatens a “tsunami … that is about to crash into retail,” according to IHL.

The firm predicts that retailers worldwide could see as much as $200 billion in returns in the first 30 to 60 days of reopening. And the loss of margin that typically comes from handling returns will be exacerbated by added safety measures due to the coronavirus.

Buzek advised retailers to look over their returns policy in light of the pandemic, deciding what they will and won’t accept and how far back in time they’ll take merchandise. Those decisions have financial implications but also can affect customer goodwill.

He also warned retailers to be on the lookout for fraud, which typically can amount to 8 percent to 10 percent of sales. “COVID brings an excellent opportunity for people to come in in the midst of the masses [of returns] to create fraud,” he said.

Buzek suggested retailers assign seasoned employees to process returns – as they would post-Christmas – not only because their experience could help curb fraud but also to soothe ruffled customers if return policies have changed.

A question posed at the end of the webinar asked whether retailers might “leverage” the pandemic to tighten return policies.

“The need for customers in the store and keeping those customers and handling that returns process right with grace … is just too critical.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].

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