Stores Are Getting Your Christmas Returns Back on Shelves Fast
Find what you needed this year? It might be because you got someone else’s return.
More retailers are working to quickly get like-new returned items back into their systems for sale. They are hoping to fill shelves and websites, as supply-chain snarls limit the availability of some new inventory, and reduce the cost of handling returns overall, a bigger expense in recent years as e-commerce sales climb.
A product sold online is more likely to be returned than one purchased in a store where a shopper can see and touch it first.
Retailers such as Walmart Inc. and American Eagle Outfitters Inc. are investing in automation, software and new warehouse systems that help cut the time it takes for returned products to become salable inventory.
American Eagle focused on streamlining returns last year after the pandemic shut down stores, the company’s main return channel, said Shekar Natarajan, chief supply-chain officer for the Pittsburgh-based apparel chain. That strategy has paid off, as supply-chain problems this year delayed shipments of some of the company’s bestselling products, such as jeans and leggings, said Mr. Natarajan.
“We have used the pandemic to try to maximize the value of the inventory,” said Mr. Natarajan.
The company set up more warehouses to receive, clean and repackage returns, he said, and employed new technology to gauge product demand to determine in advance which warehouse should process a return and which items are worth fast-tracking back onto shelves.
For example, American Eagle gives priority to leggings, which have been harder to import because of manufacturing delays in Vietnam, said Mr. Natarajan. Returning a product to shelves, depending on its priority status, now takes the chain six days or less, down from about 14 days before, and costs around half as much, he said. Company executives said they were well stocked for the holidays during an earnings call in November.
Overall, the volume of returned holiday goods is expected to rise this year, in line with sales, but not as fast as last holiday season when buying shifted rapidly online during the pandemic, say retailers and firms that handle returns for them. Some data show that more shoppers returned to stores for holiday shopping this year, helping to lighten the return load.A lack of inventory to meet demand has been a problem for some retailers in recent months, especially smaller ones that don’t have the resources to work around logjams that chains like Walmart or Target Corp. do.
Some data show returns linked to holiday purchases are happening earlier this year after many retailers kicked off their holiday deals season in early October.Such figures are in line with e-commerce trends. Online sales rose in October and early November, compared with the same period last year, then fell in late November and early December, according to data from Adobe Inc. October e-commerce sales rose 8% to $72.4 billion and November e-commerce sales rose 13.6% to $114 billion.
In the past, returns were an afterthought, “just a last thing to be processed, and it takes a while to get back to in-stock or just goes to close out sale,” said Tobin Moore, chief executive officer of Optoro Inc. The logistics technology company counts American Eagle, Target, and Best Buy Co. as clients.
“With the supply chain issues, we’ve been working with them to see returns as part of their inventory,” he said.