How This Year’s Holiday Season Shopping Behaviors Will Affect Returns

Amidst varying themes of the upcoming winter season, an unexpected and adverse development has occurred regarding holiday spending: consumers are having to adjust budgets and consider inflationary concerns along with supply chain shortages, both affecting the price and availability of many products this year. As a result, the retail industry will experience much earlier shopping trends followed by an extended return season.

Consumers, feeling the inflationary squeeze, are already in search of the best deals. At the same time, retailers will commence holiday-related shopping, consumer deals, and incentivized purchases much sooner to meet this premature demand. If a consumer is considering a holiday purchase and believes a price increase is likely or a shortage may occur, based on news accounts, they're more likely to make that purchase in the near term. The modern and connected shopper will also look for retailers offering a longer return window to better ensure the flexibility to replace an item should the incorrect commodity, size or color arrive. An extended return season can have a cascading effect on inventory availability, returned products to retailers, as well as consumer buying behaviors.

An additional statistical outliner — based on current inflationary trends — is to expect goods to be purchased in larger quantities vs. previous years. Should this occur during the busiest shopping season of the year, it will certainly create challenges for retailers as they attempt to balance high demand with low availability.

Examining trends from past holiday spending cycles, online purchases have far exceeded in-store acquisitions. That trend is expected to continue this year. As a natural byproduct of elevated purchases, there's also an expectation of increased returns. Product returns exist as a natural stage and permanent fixture in the world of commerce. Whether a midsized online e-tailer or a brick-and-mortar stand-alone store, they will have to address, plan and facilitate a returns management system. 

Factoring in Inflation and Avoiding Supply Chain Missteps 

As in much of life, adaptation is key to operating an efficient business. Inflation’s shadow is creeping in through much of our economy — from the gas pump to the grocery store to the movie theater — and causing concern for both retailers and consumers alike, especially during the holiday season.

As discussed earlier, consumers are adjusting to economic developments and are seeking beneficial holiday deals earlier on the calendar while watching for price shifts. For example, if a customer purchased an item at a reasonable market price, and later discovers that the same item is available at a significantly lower cost on Black Friday, for example, predictive consumer behavior points to them buying the same item for less and returning their first purchase.

This creates additional complexities for retailers that must manage return shipping: costs, logistics and restocking. Should an item not be available for purchase from mid-November to late December that's singularly holiday related, this may create a negative cash flow for retailers.

The network of capital and goods flowing through our economy carries a gigantic expanse beyond simple shipping lanes or express deliveries. There will be ebbs and flows, mostly on-time shipments to keep up with demands, and certainly a few late arrivals. Labor shortages, inflationary pressures, and unpredictable consumer behavior are all cautionary indicators. Retailers need to maintain a vigilant watch for unexpected movement and be prepared to adjust accordingly.

Holiday Tips for Retailers      

From a reverse logistics standpoint, there are key pillars retailers should follow this holiday season to stay afloat and help meet demand. Firstly, organizations need to make sure they have a pre-plan for inventory, ensuring that there's inventory closer to the geographic area they're selling to. Secondly, prepare for the influx of returns. First and foremost, having enough physical space to accommodate returns is a starting point. Additionally, provide an experience that facilitates fast and easy returns for customers, and enables store or warehouse employees to inspect and grade items quickly, resolve customer issues faster, centralize returns data, and disposition returns as early as possible in the cycle.

For retailers that have the benefit of physical stores, omnichannel return capabilities are a massive advantage. For online consumers, the option to return items in-store is often preferred. The incentive comes from being able to make a return or exchange easily and quickly, bypassing the return process as well as avoiding shipping. This can be done through omnichannel customer portals suggesting store locations nearby as a return option. An added benefit, statistically, when customers enter a store they're more likely to purchase or exchange. The challenge is that most retailers aren't able to systematically match returns from online purchases with their point-of-sale system.

Success is when preparation meets opportunity; there exists a monumental opportunity this holiday season for significant economic gains. Retailers and businesses need to be prepared with the tools to capture those gains. An effective returns management system is a vital tool retailers need to help the successful delivery of returned items across a vast world of commerce during the happiest and busiest time of year.

Gaurav Saran is CEO of ReverseLogix, the only provider of end-to-end, centralized, and fully integrated returns management systems built for retail, e-commerce, manufacturing, and 3PL organizations.