January 5th, 2009Return Line: Retailers Brace for Step-Up in Exchanges
Consumers are expected to return more holiday purchases than usual this year, adding to pressure on retailers’ bottom lines after a disappointing season.
Some shoppers tempted by deep discounts to buy things for themselves or others are concluding that they weren’t in love with the purchase or that it didn’t fit, says Richard Jaffee, a retail analyst at Stifel Nicolaus & Co.
At a downtown San Francisco mall, a manager at clothing chain Bebe said on some days during the past week, more merchandise has been returned than sold.
“We’ll have $5,000 in sales and $7,000 in returns,” said the manager, who declined to be identified.
An Ann Taylor store manager in the same mall said returns have been stable, but customers have been exchanging pricier clothes in new styles for more items in older styles. The manager also declined to be identified.
It will be weeks before most retailers disclose the size of their holiday returns. However, a survey of 1,000 shoppers conducted on Christmas found a whopping 86% of parents said that if their children didn’t love their gifts, they would take them back for a refund or exchange, says America’s Research Group, a consumer research firm.
The Charleston, S.C., firm predicts returns and exchanges during the week after Christmas would rise 50% over the same period a year earlier.
Kevin Mansell, chief executive of Kohl’s Corp., said the department store’s returns rose “very modestly” during the week after Christmas. He declined to provide a figure. But Mr. Mansell said he does not expect Kohl’s holiday return rate to rise significantly this year.
Returned merchandise in 2008 is expected to make up 8.7% of overall sales, up from 7.3% in 2007, according to retail trade group National Retail Federation.
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