TIMES.KY

Cayman Islands, Caribbeanand International News
Tuesday, Mar 21, 2023

A 'returns tsunami' is about to deal a crippling blow to retailers

A 'returns tsunami' is about to deal a crippling blow to retailers

It's the "calm before the storm" as consumers start to ship back unwanted gifts, but it comes as retailers are still dealing with a pile of inventory.

A tidal wave of returns is about to hit retailers already dealing with excess inventory.

Inventory glut was the theme of 2022 for retailers ranging from Nike to Nordstrom to American Eagle. Quarter after quarter, retailers — particularly in the apparel space — reassured Wall Street that they were working through the mountains of extra product they'd accumulated in 2022, the result of cooling consumer demand combined with a hangover from tangled supply chains.

And while heavy holiday discounting may have helped, industry experts say retailers are months away from fully easing their inventory issues — and that it's time to brace for a record number of returns. 


A 'returns tsunami' could hit retailers in the next two weeks

The average consumer starts sending back holiday purchases in the first few weeks of January, which means retailers will start receiving them in another 10 to 14 days, according to Romaine Seguin, a former UPS executive and the CEO of Good360, a nonprofit that partners with retailers to donate returned items that can't be resold. 

"It's the calm before the storm, because right now the storm's with the UPS stores and whoever's taking all the returns," she said. 

A December report from Insider Intelligence predicted that US shoppers would send back more than $279 billion worth of merchandise by the end of 2022, equivalent to 26.5% of consumer purchasing for the year. 

For this holiday season specifically, Rob Garf, vice president and general manager of retail at Salesforce, predicted a "returns tsunami" with more than 1.4 billion, or 13%, of orders getting returned, up 57% from last year. Returns-technology platform Loops Returns found that merchants who use its platform processed 133,000 returns on December 26 and December 27 alone, 33% higher than in 2021. 

"'More returns than ever' is the headline," said David Sobie, vice president of Happy Returns, which helps process and consolidate returns for retailers. 

Why so many? Sobie chalked it up to the "one-in-a-generation shift" from shopping in person to shopping online, which has led to people "bracketing" their purchases, meaning they buy more than one color or size of an item at a time and return what they don't want. A November Happy Returns consumer survey found that a third of shoppers planned to bracket heading into the holidays.


Retailers have been dealing with high inventory since spring 2022

But even before this "tsunami" of returns hits, retailers were already dealing with too much inventory. 

Products flew off the shelves in 2021 as shoppers, flush with stimulus money and craving a return to normalcy, drove over $6.5 billion in retail sales. Consumers were buying so much stuff that retailers placed bigger-than-usual orders for the following year. Combine those goods with all the product retailers ordered in 2021 that got stuck on a boat somewhere and arrived late, and by spring 2022, retailers were overrun with inventory — just in time for inflation to slow down consumer spending. 

By September, retailers were "drowning in inventory," D.A. Davidson retail analyst Michael Baker wrote in a note at the time, with total retail inventories up 22% year-over-year.

So when the holidays rolled around, bargains abounded. Discounts on toys topped 34%, compared to 19% in 2019, while discounts on electronics reached 20% versus 8% pre-pandemic, drawing in shoppers and "helping retailers who were challenged with oversupply issues," Vivek Pandya, lead analyst at Adobe Digital Insights, said in a statement. 

But according to Baker, even with all those discounts, retailers' inventory troubles aren't over quite yet. 

"I think they've made progress, I think we're getting there," Baker told Insider. "But I think, on average, retailers won't be fully through the excess inventory at the end of the fourth quarter. My assumption is by the back half of 2023, we're not gonna be talking about inventory overhang anymore."

Newsletter

Related Articles

TIMES.KY
Close
0:00
0:00
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
Credit Suisse to borrow $54 billion from Swiss central bank
Russian Hackers Preparing New Cyber Assault Against Ukraine
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
If this was in Tehran, Moscow or Hong Kong
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Mexican President Claims Mexico is Safer than the U.S.
A brief banking situation report
Lady bites police officer and gets instantly reaction
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Banking regulators close SVB, the largest bank failure since the financial crisis
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Don Lemon, a CNN anchor, has provided a list of five areas that he believes the black community needs to address.
Hello. Here is our news digest from London.
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
Givenchy Store in New York Robbed of $50,000 in Merchandise
European MP Clare Daly condemns US attack on Nord Stream
Former U.S. President Carter will spend his remaining time at home and receive hospice care instead of medication
Tucker Carlson called Trump a 'demonic force'
US Joins 15 NATO Nations in Largest Space Data Collection Initiative in History
White House: No ETs over the United States
U.S. Jet Shoots Down Flying Object Over Canada
Being a Tiktoker might be expensive…
SpaceX, the private space exploration company, made a significant breakthrough in their mission to reach space.
China's top tech firms, including Alibaba, Tencent, Baidu, NetEase, and JD.com, are developing their own versions of Open AI's AI-powered chatbot, ChatGPT
This shocking picture, showing how terrible is the results of the earthquake in Turkey
President Joe Biden delivered the 2023 State of the Union Address , in order to help Americans that missed the 2022 speech, do not have internet, and suffer from short memory.
The desk of King Carlos Alberto of Sardinia has many secret compartments
Today's news from Britain - 9th February 2023
The five largest oil companies in the West generated combined profits of nearly $200 billion in 2022, which has led to increased calls for governments to impose tougher windfall taxes
2 earthquakes in Turkey killed over 2,300 people
Powerful Earthquake Strikes Turkey and Syria, Killing More Than 1,300 People.
×