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Don’t waste another dime on bloated channel reporting and vanity metrics.
Don’t waste another dime on bloated channel reporting and vanity metrics.
Record returns and clearance deals are giving brands and retailers a chance to re-engage customers.
Holiday shopping gave way to returns season after Christmas, as some people opted to send back the gifts that weren’t quite right.
This year, higher returns have been a trend throughout the holiday season, in part because higher prices due to 40-year-high inflation kept people extra conscious of spending choices.
Salesforce predicted a “returns tsunami,” based on early holiday results. In data released earlier this month, the Commerce Cloud provider projected that 13% – representing $1.4 billion – of online orders will be returned over the holidays, a 57% increase over 2021. In one particularly inflationary behavior, the company found that people were returning one product after finding a better deal on another.
Once gifts are opened, the post-Christmas period is the time when the most items are sent back. There are signs that direct-to-consumer brands are processing higher return volumes this week. Loop, which makes a returns management platform used by Shopify brands such as Allbirds, Chubbies and Brooklinen, saw a 33% increase over 2021. On Monday and Tuesday (12/26-27), the platform saw a record of more than 133,000 returns.
Returns are an inevitable part of retail, as not everything will be a fit once an item is brought home. That is especially true in ecommerce, where brands offer free return policies to provide flexibility to consumers who can’t touch and feel a product before they buy it.
Yet returns have also created logistics and profitability challenges for brands, so they are seeking ways to recoup sales.
One way to do this is to encourage customers to make an exchange rather than simply sending an item back. This holiday season, Loop saw its largest drop in refund rate, which measures how many items are simply sent back. From Q1-Q3 , 71% of returns were refunded. But over the holiday period, the refund rate was 60%.
Returns can also create an upsell moment, as a customer’s interaction with a brand provides an opportunity to peruse other products. On Dec. 26, Loop saw its largest-ever day of upsells from returns, and merchants using the platform made nearly $300,000 in sales from upsells since Christmas.
Returns will happen, so brands should make it count. Treat this post-purchase interaction as another place to build a relationship with a customer.
“Most returns do not happen because a customer dislikes their brand, but rather because they dislike a particular product. A return is a chance for brands to re-engage with customers and repair a broken promise, whether that be a damaged item or one that didn’t look as expected or didn’t fit, Loop SVP of Marketing Tasha Reasor told The Current. “Therefore, it’s important that brands invest in their returns experience, as this will not only save them time and money, but also drive revenue and foster brand loyalty.”The post-holiday period is also typically a time of clearance sales for retailers. At Target, that proved to be an opportunity to create the latest new holiday shopping event.
On Monday, Dec. 26, the retailer kicked off “The Target Clearance Run.” Target promoted deals that included up to 50% off on clothing, shoes, toys, beauty and home décor.
"Our guests always look forward to post-holiday deals, whether they're looking to spend the gift cards they received as a holiday gift, restock their pantries after hosting for the holidays or prepare for a New Year's celebration. 'The Target Clearance Run' is the perfect moment to do just that," said Christina Hennington, executive vice president and chief growth officer at Target, in a statement.
Deal events are a hallmark of the 2022 holiday season. They started early with October holiday kickoff events from Amazon, Target and Walmart. The clearance event shows that peak season is also ending late, as brands and retailers seek to continue delivering deals to price-weary consumers.
More people are expected to gift experiences in 2023.
Consumers are planning to up spending for Valentine’s Day 2023. Ecommerce is expected to be the top shopping destination, even as there will be a big uptick in people gifting experiences.
Here are key findings from the National Retail Federation and Prosper Insights & Analytics on Valentine’s Day 2023 expectations, conducted Jan. 3-11 with a survey of 7,616 U.S. adult consumers:
U.S. Valentine’s Day spending is expected to reach $25.9 billion, up from $23.9 billion in 2022.
Online will be the top destination, with 35% of shoppers planning to buy through ecommerce. This is followed by department stores (34%), discount stores (31%) and specialty stores (18%).
About half of consumers plan to participate in Valentine’s Day, while half will also seek out discounts or promotions.
Average spend will be $192.80, up from $175.41 in 2022.
Key insights:
It’s not just romantic. Gifts for pets, coworkers, friends and classmates or teachers will account for $14 of the $17 per-person increase.
Many more people plan to go out. About one-third of consumers are planning to give the gift of experience, up from 26% last year and the highest since the survey began in 2017. Men, in particular are more likely to give the gift of experience.
Top gifts include candy (57%), greeting cards (40%), flowers (37%), an evening out (32%), jewelry (21%), gift cards (20%) and clothing (19%).
Key quote from NRF CEO Matthew Shay: “Valentine’s Day is a special occasion to shop for the people we care most about. This year, as consumers embrace spending on friends and loved ones, retailers are ready to help customers celebrate Valentine’s Day with memorable gifts at affordable prices.”
The bottom line: Many of the fundamentals from the holiday season are holding up during Valentine’s Day. People are seeking discounts and returning to experiences. But they are still turning to ecommerce, which is showing continued staying power.