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December 17, 2021

How to Handle Returns Like a Pro & Stay Profitable After the Holidays

Samantha Hubay

Written by:

Samantha Hubay

How to Handle Returns Like a Pro & Stay Profitable After the Holidays

If you're a retail business owner, you know that the final weeks of the year are typically accompanied by many product returns and exchanges. However, the seven days between Christmas and New Year's Day see the most return traffic for purchases made in-store and orders placed online. In early 2021, Digital Commerce 360 reported that returns for online orders increased by 70% between these holidays (compared with the daily average for September 24th - November 29th).  

In this post, we'll explore some of the reasons for the flurry of returns and exchanges following the holiday season. We'll also provide tips to help you handle these returns with profitability in mind. 

 

December 26th is a Pivotal Day

The day after Christmas is a very important day for all retailers. Just like Black Friday, Small Business Saturday, and Cyber Monday, you should take time to prepare your store and team for this day. 

Here are a few reasons why your store may see increased traffic on December 26th: 

1. Customers are excited to use new gift cards.

Many people receive gift cards from friends and family for the holidays. Once all the gifts have been unwrapped and a scrumptious dinner consumed, those gift card recipients will be itching to go out shopping.

Large retailers like Macy’s, Walmart, and Home Depot know this and hold day-after-Christmas sales to get as many customers in the door as possible. Some of these retailers also extend their store hours on December 26th to cater to eager shoppers.


2. Customers are hunting for end-of-season sales.

Many customers plan on shopping at the end of the holiday season to take advantage of deals and sales. You can capitalize on this by spending a little extra time before the holiday break organizing markdowns and sale items. 

When customers walk in, make sure it's clear where your end-of-season sale items are located. Selling this inventory, even at a marked-down price, can help you maintain profitability after the holiday season. Plus, it will help you clear shelf space for fresh 2022 inventory.  


3. Customers need to complete post-holiday returns and exchanges.

December 26th is commonly known as “exchange day” for holiday gifting gone wrong. Whether the customer received a wrong size, the wrong color, or multiple of the same item, they will be eager to make their return and purchase that one thing missing from their holiday wish list.

While returns are usually unavoidable, there are ways to keep profitability top-of-mind while still catering to customers eager to find something new. For example, encourage your customers to exchange their items rather than return them.

Next, we'll look at a particular shopping habit that is likely to affect return rates this year. 

 

How Bracketing Affects Return Rates

As we mentioned before, customers often make gift returns after the holidays because they received the wrong size, wrong color, or multiple of the same item. As a retail business, you know these things happen, which is why you have a store return and exchange policy. However, a new wrinkle in the purchasing fold may bring more returns than expected to your store this year.

It's called "bracketing".

Bracketing refers to a consumer purchasing multiple versions of the same item (different sizes, colors, etc.), trying them out at home, and then returning the options that didn't work. This approach is most often taken when purchasing apparel or shoes online. 

In a 2020 survey from Narvar, 70% of consumers age 30 and younger reported they bracket, and 66% of shoppers with a household income over $100,000 said they also bracket. These numbers are up almost 25% from 2017. 

So, why did bracketing suddenly become so popular? Two words: free shipping.

Many online apparel retailers offer free shipping for orders and returns in some capacity, such as with a minimum purchase or after signing up for promotional emails. These online retailers often offer free return shipping as well to seal the deal. 

Other common reasons reported for bracketing in 2020:

  • 41% of consumers surveyed have experienced recent weight fluctuation and don’t know their correct clothing size.
  • 31% of consumers surveyed typically try things on in-store but did not have this option in 2020 due to the pandemic.
  • 21% of consumers surveyed were purchasing from new, unfamiliar retailers and wanted to try different fits and styles.

All this to say - if your customers bracketed their holiday purchases, you should prepare for potentially higher return rates than usual. Our tips for handling returns can help you tackle these higher rates and finish the year strong!

 

Quick Tips for Handling Returns

Let’s look at a common post-holiday scenario for many retailers.

A customer enters your store with a bottle of perfume she received as a holiday gift. While the thought was appreciated, the scent was a bit too floral for her, so she decided to return it to your store. When she walks in the door, you need to have a plan that both satisfies her needs and helps you maintain profitability.

We recommend following these steps:

1. Make sure the customer is welcomed into the store.

The greeting a customer receives may be the difference between a hefty return, an exchange, or an additional sale. Assign a team member to welcome each customer to the store and share quick information about the sales or promotions you have going on that day. An example could be, “Welcome in! The whole store is 20% off today. Is there anything I can help you find?”

An assigned greeter will be especially helpful for customers like the woman from our example. She enters the store knowing she wants to make a return. Your greeter could change that into an exchange by simply saying, “We’d be happy to do that for you. Can I help you find a scent that you like better? The whole store is 20% off today, so it's a great day to pick a new fragrance!”

Now instead of heading right for the cash register, the customer is taking some time to shop around, with your team member's attentive help.

 

2. Train cashiers to process seamless returns and exchanges.

When the customer makes her way to the register, train your staff to genuinely listen to her needs. Once the customer has finished sharing her story, make sure your staff is prepared to begin a smooth return process. You could even go so far as to create a sample script for your team to use. Here's an example:

Customer: Explains their need for a return.

Cashier: I'd be happy to take care of that for you today. Do you have the receipt?

Customer: Produces receipt or gift receipt.

Cashier: Wonderful, thank you. Now I just need to enter a few details into my system here. Can you tell me if the item has been used? And if so, what was wrong with it?

Customer: Responds accordingly.

Cashier: Before I go ahead and process this for you, are you sure you don't want to exchange it for something else? The amount you'll have available to you from returning the item is $XX.XX. We have some great sales going on right now if you'd like to have a look around!

A script like this will always vary, but giving your team a baseline with key talking points can help the entire process run smoother. 

 

3. Offer specific exchange suggestions and try to minimize product waste.

If your team is knowledgeable about your products and has been diligently listening to the customer, they should be well-equipped to make exchange suggestions. It’s important to make sure the customer doesn’t feel she is being pushed into exchanging, but at the same time, you need to do your best to minimize product waste. 

Train your staff to know the value of your products and make suggestions for new or similar products that would satisfy the customer’s needs.

For example, because the perfume from our original example was too flowery, suggest a different option at a similar price point with notes of musk or spice. This approach requires all team members to be familiar with both new and recently sold products. Therefore, it may be helpful to keep any seasonal team members you have hired on the payroll for a few more weeks. They will likely be very familiar with items sold over the holidays, along with the new products that are hitting shelves. 

 

4. Always upsell when appropriate. 

If the customer is still set on getting her money back, that’s okay. Don’t push her into thinking that she can’t return the perfume. You want her to have a good experience in your store so she will return in the future – with friends!

However, it’s still beneficial to mention any special promotions, new products, or best sellers she may enjoy. Depending on your store’s return policy, you can also offer to put her refund on a merchandise credit or gift card. That way the money stays with your store and she can earmark it for the big release of a new perfume.

To maintain profitability after the holiday shopping season, it's important to turn as many returns into exchanges as possible. If you must give out a few refunds though, don’t sweat it. Remember, you want to see the customers who make these returns at your store again in the future. Give them the best experience possible, be their holiday hero, and express your hopes of seeing them again in the new year.

 

Sources: The Balance SMB, Digital Commerce 360

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