December 24, 2019

How to Keep Retail Profits Up After the Holidays

Samantha Hubay
Written by:

Samantha Hubay

How to Keep Retail Profits Up After the Holidays

The shopping frenzy that surrounds the holiday season is coming to an end, but the busiest time of the year isn’t over yet. Retail businesses everywhere will soon see customers shift from “shopping mode” to “return mode”. If you aren’t prepared for this shift, you could end up losing a significant portion of your hard-earned holiday profits to returns and refunds. Guard those profits with our helpful tips for handling post-holiday traffic.


Why 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 will need to take time to prepare for December 26th. So, what makes this day so important? Here are three reasons:

1. Gift Cards Galore
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. Looking for Something New
Chances are that many of the customers you see on December 26th will have already visited your store during the holiday season to purchase something for their special someone. Encourage them to shop around and see what’s new by giving your store a fresh look, breaking out the new merchandise, and having your markdowns ready. While many retailers will wait until January to hold an end-of-year clearance sale, turning merchandise before January will help you capitalize on the final days of holiday shopping.

3. 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. Encourage these customers to exchange their items rather than return them to keep your business profitable.


Returned holiday gifts are inevitable. With more purchases made online than ever before, the amount of returns made during this time continues to rise. In 2018, total retail sales made during the holiday season amounted to over $850 billion. According to the National Retail Federation, about 13% of those purchases were returned after the holidays. That brought overall retail profitability in the U.S. down to just over $739 billion.

You can see how easily returns and refunds during this time of year can affect the profitability of your business. While returns are unavoidable, there are ways to keep profitability top-of-mind while still catering to customers eager to find something new. Keep reading for tips on how to turn a return into an exchange or upsell.


How to Handle Returns Like A Pro

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 gift for the holidays. 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. Greet the Customer
The greeting a customer receives may be the difference between a hefty return and an exchange or 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, so have a look around”.

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”. Now instead of heading right for the cash register, the customer is taking some time to shop around.

2. Listen, Learn, and Be Empathetic
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 ask return-qualifying questions such as:
  • Why is the item being returned?
  • Is something wrong with the item?
  • Has the item been used?
3. Make Informed Suggestions
Once the questions above have been answered, your staff should be well-equipped to make suggestions for moving forward. 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 consider profitability. 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 of a scent, suggest a different brand with notes of musk or spice. For this to be successful, your cashiers will need to have a well-rounded knowledge of your products.

4. Cross-sell and Up-sell
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 that 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.


There’s no doubt about it, you’ve got a big week coming up. It’s important to turn as many returns into exchanges as possible, but if you must give out a few refunds – 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: Retail Doc, The Balance SMB, Red Stag Fulfillment