It's common practice for consumers to return goods in mass quantities following the holiday season. But this year, that concept may be taken to more of an extreme.
In November, digital sales climbed 31.2% year over year, due in large part to consumers' desire to avoid in-person shopping during a pandemic. But many of those purchases are likely to be given back to stores in the coming weeks, and at a higher rate than in previous years.
How bracketing could hurt retailers this year
Bracketing is the concept of buying multiple versions of the same item, knowing at least some will be returned. A customer, for example, might shop online for a pair of pants without being certain what size they need or what color works best. As such, they may be inclined to order the same pair of pants in multiple colors and sizes, keep one or two, and return the bulk of that purchase.
The idea of bracketing isn't new, but there's been an uptick during the pandemic. More than 60% of consumers employed bracketing in 2020, reports customer experience platform Narvar, which represents a 29% increase from 2019.
To be fair, consumers aren't bracketing just to stick it to retailers. For 41%, that uptick is attributable to the fact that their weight has fluctuated during the pandemic. Meanwhile, for 31%, it's because they can't simply try things on in a store and walk out with the handful of items they need like they normally would. And also, some consumers are just plain new to online shopping and may have gone overboard.
But while post-holiday returns are nothing new, this year, retailers may be in for a shock -- a shock that could constitute a major revenue killer. It's bad enough retailers have seen their profits decline in the course of the pandemic, between mandatory store closures, capacity restrictions, and a general economic crisis that's forced many people to cut back on spending. But a notable increase in returns could be bad news.
That said, retailers can, and should, seize the opportunity to capitalize on those consumers who opt to do their returns in person. Offering incentives and promotions that result in impulse purchases could help retailers recoup some of the revenue they're apt to lose. Of course, this only works with customers who aren't too skittish to enter a store. Those who opt to mail in their returns won't be in a position to be lured to spend more.
Mall operators should be on alert
While a boom in holiday returns won't necessarily drive retailers into the ground immediately, for those that were already struggling, this could be that added nail in the coffin. That's bad news for mall operators, who can't afford to lose more tenants than they've already had to part with. An estimated 8,300 stores closed in the course of 2020, and that statistic doesn't even account for year-end data. If closures continue at a record pace, malls will land in serious trouble, and those who invest in them will be in line for serious losses.