Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

A 'returns tsunami' is about to deal a crippling blow to retailers

A 'returns tsunami' is about to deal a crippling blow to retailers

It's the "calm before the storm" as consumers start to ship back unwanted gifts, but it comes as retailers are still dealing with a pile of inventory.

A tidal wave of returns is about to hit retailers already dealing with excess inventory.

Inventory glut was the theme of 2022 for retailers ranging from Nike to Nordstrom to American Eagle. Quarter after quarter, retailers — particularly in the apparel space — reassured Wall Street that they were working through the mountains of extra product they'd accumulated in 2022, the result of cooling consumer demand combined with a hangover from tangled supply chains.

And while heavy holiday discounting may have helped, industry experts say retailers are months away from fully easing their inventory issues — and that it's time to brace for a record number of returns. 


A 'returns tsunami' could hit retailers in the next two weeks

The average consumer starts sending back holiday purchases in the first few weeks of January, which means retailers will start receiving them in another 10 to 14 days, according to Romaine Seguin, a former UPS executive and the CEO of Good360, a nonprofit that partners with retailers to donate returned items that can't be resold. 

"It's the calm before the storm, because right now the storm's with the UPS stores and whoever's taking all the returns," she said. 

A December report from Insider Intelligence predicted that US shoppers would send back more than $279 billion worth of merchandise by the end of 2022, equivalent to 26.5% of consumer purchasing for the year. 

For this holiday season specifically, Rob Garf, vice president and general manager of retail at Salesforce, predicted a "returns tsunami" with more than 1.4 billion, or 13%, of orders getting returned, up 57% from last year. Returns-technology platform Loops Returns found that merchants who use its platform processed 133,000 returns on December 26 and December 27 alone, 33% higher than in 2021. 

"'More returns than ever' is the headline," said David Sobie, vice president of Happy Returns, which helps process and consolidate returns for retailers. 

Why so many? Sobie chalked it up to the "one-in-a-generation shift" from shopping in person to shopping online, which has led to people "bracketing" their purchases, meaning they buy more than one color or size of an item at a time and return what they don't want. A November Happy Returns consumer survey found that a third of shoppers planned to bracket heading into the holidays.


Retailers have been dealing with high inventory since spring 2022

But even before this "tsunami" of returns hits, retailers were already dealing with too much inventory. 

Products flew off the shelves in 2021 as shoppers, flush with stimulus money and craving a return to normalcy, drove over $6.5 billion in retail sales. Consumers were buying so much stuff that retailers placed bigger-than-usual orders for the following year. Combine those goods with all the product retailers ordered in 2021 that got stuck on a boat somewhere and arrived late, and by spring 2022, retailers were overrun with inventory — just in time for inflation to slow down consumer spending. 

By September, retailers were "drowning in inventory," D.A. Davidson retail analyst Michael Baker wrote in a note at the time, with total retail inventories up 22% year-over-year.

So when the holidays rolled around, bargains abounded. Discounts on toys topped 34%, compared to 19% in 2019, while discounts on electronics reached 20% versus 8% pre-pandemic, drawing in shoppers and "helping retailers who were challenged with oversupply issues," Vivek Pandya, lead analyst at Adobe Digital Insights, said in a statement. 

But according to Baker, even with all those discounts, retailers' inventory troubles aren't over quite yet. 

"I think they've made progress, I think we're getting there," Baker told Insider. "But I think, on average, retailers won't be fully through the excess inventory at the end of the fourth quarter. My assumption is by the back half of 2023, we're not gonna be talking about inventory overhang anymore."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
×