December 7, 2019 Finance and Tech Publication

Most consumers expect to return gifts this holiday season—and it’s changing how shoppers spend

Holiday shoppers in North Attleboro, Massachusetts.

Derek Davis | Portland Press Herald | Getty Images

One way for retailers to make sales during the holidays is to expect a good amount of the items will be coming back.

This year, 77% of consumers plan to return some of their gifts and nearly 20% expect to return more than half, according to a survey by Oracle of 15,800 consumers. Experts say the thought process behind purchasing gifts has shifted.

“They have given a retailer their money, but they haven’t given them the promise of keeping it,” said Kit Yarrow, a consumer psychologist, about shoppers. “There’s a whole different mentality around ownership.”

Consumers have become pickier, and while people used to return gifts sneakily, now they’re upfront about it, Yarrow said.

“Consumers are making it clear that returning and exchanging gifts is okay.”

As gift-returning has grown, shoppers are more likely to go to stores that have generous return policies so the recipient can take back the gift if they choose, said Lars Perner, assistant professor of clinical marketing at the University of Southern California Marshall School of Business.

Before heading into stores, shoppers even think about returning the gifts themselves — before the gifts even get to the intended recipient. Sometimes, it is so the shopper can safeguard their shopping trips. Knowing they can return a purchase allows them to leave the store with a gift but also provides a chance to buy something better if it comes along.

“They think, ‘Here’s a potential good deal … but if I can get something better, I reserve the right to exchange it,'” Perner said.

Shoppers also appreciate good return policies because they protect them from the fear of missing out, Yarrow said.

“If there is a decent return policy … consumers think to themselves, ‘Well, I better buy it to make sure I get it.”

Online shopping has drastically changed the idea of returns, she added, because there is so much more for shoppers to choose from. The ability to buy something at the click of a button gives shoppers power in the market.

Online apparel stores also need to offer generous return policies because customers can’t try on the items before purchasing them. With more shopping shifting online, even on days like Black Friday that traditionally were known for shopping at brick-and-mortar stores, the likelihood of returns can grow.

“When you go to the store to buy shoes, you can try them on — we don’t have that,” said Rob Siefker, senior director of customer service at Zappos, an online retailer specializing in shoes and clothing. “We have a return policy that allows them to buy the product and try them on at home comfortably.”

Zappos allows customers to return unworn items for a full refund within a year of purchase. The company also pays for the return shipping, which Siefker said ensures customers don’t feel like they have to invest money just to try on shoes.

Although Zappos still finds some customers are happy to have the lenient return policy, many expect it from retailers, Siefker said.

They have given a retailer their money, but they haven’t given them the promise of keeping it. There’s a whole different mentality around ownership.

Kit Yarrow

Consumer psychologist

Just before holiday shopping last year, Walmart adjusted its return policy for customers buying items from third parties on Walmart.com, allowing them to print shipping labels directly from the website and view the return policies for items online.

This year, Amazon will accept returns through Jan. 31 for most items shipped between Nov. 1 and Dec. 31. Best Buy will accept returns through Jan. 14 for items purchased between Nov. 1 and Dec. 31, excluding some electronics and major appliances. Items purchased from Walmart between Oct. 24 and Dec. 25 with a 14-day return window may be returned until Jan. 10. Items with a 30-day return window may be returned until Jan. 25.

More returns, however, are costly and complicated for retailers. Returned merchandise often cannot be resold at its original full price, Perner said. It’s even tougher when an item has a limited shelf life, like Christmas decor or a heavy winter coat. Retailers will simply try to unload the items when possible, even if it is at a very low price.

But generous return policies allow retailers to be competitive, and as an ongoing trade war causes concern for holiday spending, it’s especially important for them to stay ahead.

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