You might not have noticed, but most retailers actually have too much stuff. Not in a your-dad-complaining-about-how-consumerism-is-out-of-control way (well, not *just* in that way), but in an overflowing-inventories way. Stores are having to contend with a surplus of goods that people just aren’t buying fast enough or keeping long enough. Typically, this is solved by massive discounts but that doesn’t always cut it. CNN reports that some of the biggest store chains, including Target, Walmart, Gap, and American Eagle Outfitters are considering a new strategy: letting customers keep their returns.
Burt Flickinger, managing director of retail consultancy Strategic Resource Group, has outlined why the move might be to certain companies’ advantages. Typically, when you return something, the retailer will evaluate its condition. If it’s good, it gets cleaned and put back on the shelf, sometimes at a lower price. If it’s damaged, it gets refurbished, liquidated, or offloaded to other countries. With global shipping still lagging behind demand, that last option isn’t really viable, and all of them cost money.
“For every dollar in sales, a retailer’s net profit is between a cent to five cents,” Flickinger told CNN Business. “With returns, for every dollar in returned merchandise, it costs a retailer between 15 cents to 30 cents to handle it.”
This is one of the big downsides to discounts, too. People tend to buy a lot of things they don’t actually want on discount, and tend to return their excess purchases, which creates overflowing inventories, starting the whole vicious cycle over again. Since sales are down and returns are costly, Steve Rop has revealed that many of his clients are considering the new Keep It policy. Rop is the chief operating officer with goTRG, a firm that processes over 100 million returned items annually for companies like Wal-Mart, Amazon, and Lowe’s.
These decisions are likely influenced by the fact that Amazon has already instituted a similar policy. While the policy does run some risk of fraud, the policy doesn’t apply to everything, and Amazon has made their system difficult to trick (and they’re not exacting hurting for cash).
While no retailers have officially announced they will be participating in this new system, the advantages to them and the customer are obvious. Maybe you can save yourself one more trip to the store, especially in the wake of ever-rising gas prices.
