While the holiday season delivers a bounty of revenue and customer joy to retailers, it also signals the calm before the chaotic post-holiday returns storm. A calculated strategy for managing post-holiday returns is crucial for a profitable holiday season and to avoid negative revenue in January.
The reality of holiday returns
Returns can be considered a year-round scourge for retailers. It is predicted that the total retail return value will balloon by the end of 2024 by 2.0% to reach $931.85 billion, with a significant slice falling within the holiday season. According to Modern Retail research, the average return costs retailers $30 – this average considers truthful and fraudulent returns, too. Additionally, retailers’ standard post-holiday returns period is 30 to 90 days post-purchase. Until recently, January 2nd was marked as National Returns Day by UPS, but they have elongated the timeframe to a week instead of one day.
How many holiday returns are fraudulent?
Leaders throughout retail are acutely aware of the financial impact of post-holiday returns and tasking Loss Prevention teams as the frontline forces to reduce this impact. The scale of the problem is evident in the fact that in 2023, fraudulent post-holiday returns amounted to a staggering $148 billion, with nearly $25 billion of those being fraudulent, representing 16.5% of total post-holiday returns–meaning that the average retailer was losing $13.70 in return fraud for every $100 returned. This underscores the critical need for retailers to implement proactive ways to handle post-holiday returns strategies that ensure a positive consumer experience and empower them to combat fraud effectively, thereby protecting their retail holiday profits.
If the overall burden of post-holiday returns was not enough, ecommerce and omnichannel options for consumers have fueled a massive increase in fraudulent activity, too. Look no further than the recent news of a 21-year-old University of Miami student who allegedly pocketed $3.5 million in lost product and sales revenue to victim retailers. These types of scammers prey on susceptible retail return policies by lodging false complaints about merchandise never being received or by falsely starting refunds or returns on shoppers’ completed online orders.
7 tips to protect profits during the holiday returns season
The 2024-2025 post-holiday returns season is projected to surpass last year’s benchmark, but there is still time to get ahead of the curve. Use these seven tips to review current returns processes and prepare your team for the post-holiday returns rush:
1. Ensure consistent use of loss prevention measures
Increased foot traffic in brick-and-mortar stores and more visitors to a retailer’s website is the beauty of the holiday season, and it is also when retail crime peaks. Tackling fraud and loss during the holiday season requires reviewing your loss prevention strategy months in advance, focusing on investigating, responding, and correcting incidents in real-time.
With the FBI recently announcing that organized hacking groups are targeting employees at U.S. retail corporate offices to create fraudulent gift cards, Loss Prevention teams must alert and train store associates of the current social engineering scams involving gift cards. While many of these fraud methods have been going on for years, Loss Prevention must update store associates and management on how to respond and notify if their store was targeted.
2. Maintain a smooth return process with proper employee training
A significant aspect of post-holiday returns is acknowledging that most consumers are going through a stressful time. Focus on training your in-store and online associates to be supportive and understand that a positive return experience could pay off through shopper loyalty. Additionally, now is the time to seek out the associates who require a little more training before the holidays are in full swing. Use data analytics for generating coaching session opportunities to reduce losses due to associate errors and provide a positive (and profitable) customer experience for your brand.
3. Seize the opportunity to convert returns into sales opportunities
Think of post-holiday returns as a critical touchpoint to capitalize on a consumer’s heightened attention. Whether in-store or online, returns offer the opportunity to deliver a personalized offer or message to the consumer that encourages them to shop again. Luckily, many retailers can see a 34% increase in gross profit after a return when implementing these types of offers. By utilizing the right technology, retailers can create a seamless purchase journey that increases revenue and boosts consumer retention.
4. Allow more flexibility in return policies
A well-crafted return policy can be a retailer’s secret weapon to protect retail holiday profits during the holiday season. A clear and consistent return policy can be an instant confidence booster to customers; by knowing the mechanics of the return policy, consumers are inclined to purchase more, knowing they have a safety net they can access post-purchase. A streamlined return policy also makes a flexible “holiday season returns program” even more special and memorable; an example would be extending the returns window by 30-45 days, etc.
5. Consider returns as an important customer service practice
Post-holiday returns are just as crucial as the initial purchase. They offer a chance to extend the joy intended with the original purchase. Retailers can turn this chaos into an opportunity by leveraging frontline associates to transform returns into exceptional experiences, both in-store and online. When every other retailer is only focused on surviving the tidal wave of post-holiday returns, consider this period as a way to check in with these consumers and guide them to the right products and choices – even if it means encouraging them to buy less in the moment.
6. Convert more returns into exchanges
While flexibility with post-holiday returns is crucial, retailers must always focus on protecting their bottom line. Helping shoppers find a new product that they can exchange for the old product makes returns less painful for both the retailer and the customer while managing operational and financial considerations.
7. Audit previous holiday returns
Post-holiday returns can give retailers great insight into the products customers dislike or love. Additionally, retailers can garner more insight into the common reasons for returns and even reassess their return policies and procedures. While this data is just a snapshot for one season, it can help retailers improve their post-holiday returns experience for the following year.
Read Next: “How a Positive Customer Experience Leads to Loyal Shoppers”
