The next step for retailers: a big wave of gift returns

NEW YORK (Reuters) – As customers shove their last Christmas presents under the tree, U.S. retailers are gearing up for a flurry of returns for online gifts purchased during the deadly increase in coronavirus cases. To make the process more efficient, retailers, including Walmart Inc and Target Corp, allow customers to drop unwanted gifts at FedEx or United Parcel Service delivery locations.

Others, including Best Buy, Dick’s Sporting Goods and Nordstrom, are offering sidewalk returns for the first time as efforts to prevent the spread of COVID-19 have closed stores or reduced the number of allowed customers inside.

Returns are expected to increase this year. Shoppers looking to avoid contagion have moved from stores to online stores – where return rates are historically higher. Retailers are also under pressure to make the process as simple as possible for buyers who wish to retain as long-time customers, as well as for UPS and FedEx, who are inundated with packages.

Even some malls are moving to make it easier for shopkeepers to return. Mall of America and Simon Property Group have partnered with Narvar, a return management provider, to eliminate the need for customers to print return labels for the packages they deliver.

The National Retail Federation expects 2020 holiday sales to increase 5.2% from last year, to $ 766.7 billion. Approximately 13% of the goods, or about $ 101 billion in goods, sold during the 2020 holiday season will be returned, the trading group said.

Optoro, which helps retailers to sort, resell and dispose of returned goods, further increases the number. He predicts that the 2020 holiday results in the U.S. will reach $ 115 billion between Thanksgiving Day and the end of January. This represents a 15% increase from the 2019 forecast issued by the company, which includes UPS and home furniture retailer IKEA among its investors.

The in-store return rate for clothing is 5 to 8%, while online returns are around 30%, said Rob Zomok, president of global operations at Inmar Intelligence, which processes around 600 million retail and e- commerce annually.

“This math created a significant increase in returns,” said Zomok, who added that apparel returns are at a record high.

“When your purchases are 100% online, you are probably asking for some extra items with the intention of returning,” said Sriram Sridhar, chief executive of, who helps customers track packages.

“We expect each retailer to have about 50% more returns than in previous years during the holiday season,” said Sridhar.

In addition, retailers also quarantine or sanitize products after they are returned to ensure they are free of the virus.

“This is not the typical way returns are processed,” said Paula Rosenblum, managing partner at retail research firm RSR Research.

Kohl’s, which collects returns from and sends them in bulk to the e-tailer, has extended its own deadline for premium electronic products.

It joins a number of retailers, including Walmart, Macy’s and Amazon, which are giving customers more time to return purchases – a move that could make it difficult to resell seasonal goods.

Getting these products to be resold is vital – especially for fast-fashion retailers who sell trendy clothes, said Inmar’s Zomok.

“The window is going to be short,” said Zomok.

Reporting by Anna Driver; Aurora Ellis Edition