Holiday Gift Returns Expected to be Higher in Part From Supply Chain, Labor Woes

Americans’ returns of unwanted holiday gifts will prove costlier for retailers, CNN wrote Wednesday (Dec. 29), particularly as retailers grapple with higher costs due to the tag-team attack of the supply chain and labor market issues.

Returns processor Optoro said that this holiday season, the cost to return a $50 item could amount to 66% of its sale price, on average. This is up from 59% last year.

The costs have also suffered from discounting and liquidation issues. Returns are not unusual after the holidays, and the higher percentage of online shopping has only expedited that.

According to Optoro, two out of three shoppers are likely to return at least one gift during the 2021 holiday season, and there is likely to be around $120 billion in goods returned between Thanksgiving and the end of January 2022.

The 2021 holiday season is also likely to be a time of record-setting, with National Retail Federation President and CEO Matthew Shay saying the holiday sales could boost as much as 11.5% from 2020.

Americans soldiered on and kept shopping this year despite a myriad of issues, such as supply chain issues and inflation. Per a report from Mastercard, retail sales were up 8.5% year-over-year between Nov. 1 and Dec. 24, with clothing sales helping to drive that along.

PYMNTS wrote about Mastercard’s analysis from adviser Steve Sadove, who said holiday shopping was beginning to start much earlier, beginning more in October or so.

See also: Mastercard: Retailers Prepped to Turn Holiday 2021’s Success Into 2022’s Retail Revival

He said the consumer “buys early” and then they continue to buy, and so it would be good for businesses to keep the season running longer by utilizing promotions and keeping products running over numerous months.

In addition, Sadove said there should also be an effort from retail industry executives to manage inventory. Retailers, he said, had fallen into a scenario not knowing what demand was going to be, with everyone planning for the worst and not buying enough.