The holiday season is quickly approaching and with that comes excess laughter, family, food, and, in retail, inventory. While retailers strive for a successful holiday season by carefully planning their merchandising, promotions, and pricing, usually the season doesn’t always go as planned. In some years, shoppers go wild, depleting stores of stock and asking for more; other times, items remain on the shelves, with customers sending back return after return.
Either way, retailers are left with excess inventory in some merchandise. It’s an unavoidable and dreaded truth of the industry, and it makes the holiday season much longer.
Retailers begin the new year with post-holiday promotions, having diligently strategized ways to grasp the last few straggling shoppers still at it after the months of holiday spending.
It’s hard, making those leftover items count and accepting the piles of returns. So we’ve put together a few tips on how to seek out a profit while handling the post-holiday retail returns.
- First and foremost: forecast. Accept the fact you will get returns and leave room for them, both in your budget and in your stores and warehouses. According to NRF, the estimated annual returns this holiday season will be about $260.5 billion, accounting for 8% of all annual sales.
- Create a simple return policy, and let it be known. An easy return policy is both more attractive to consumers and can also be effortlessly remembered. Strict and short windows for return policies lose customers. According to a Total Retail survey, 85% of customers won’t buy again from a company that has complicated or inconvenient return policies.
- Track and record any and all returned merchandise in real-time. This inventory visibility is important as it gives retailers the opportunity to analyze the data and understand why they are happening and what merchandise is being returned, leading to smarter promotions and merchandising decisions.
- Sell known “loss-leaders” (merchandise you know will not make a profit) to off-price retailers. Off-price retailers can range anywhere from the big Fortune 500 companies, such as TJ Maxx, to smaller mom-and-pop regional businesses. Selling inventory that you know your consumers will not buy will give you more space for current inventory, increase your cash flow, and sometimes even allow you to make a higher profit from that merchandise.
While the post-holiday season can be daunting with the increased return rate and excess inventory, retailers with a well-planned strategy and positive attitude can diminish the potentially negative impacts of these returns and come out well-prepared for the new season.