Friday, January 14, 2022

Focus On January Returns Not December Retail Sales

To those looking at data from holiday consumer purchases as proof of consumer demand and the economy is strong I think more attention should be paid to what happens next. With direct payments to American households being halted, for now, Americans with children are returning to more normal spending habits. This means not focusing on December retail Sales but what drove those sales. Most likely much of the money spent flowed from the helicopter money which the government showered upon the American people. Mainstream media was quick to tell people to shop early because goods might not be available due to supply chain disruptions.

For an idea of what is happening in the economy, we should look at January and the post-holiday returns. It has been reported to me they are bigger than huge. Many people are busy returning a good amount of what was purchased and many of them may not be exchanging goods but simply returning items. Returns are bad for retailers and online sales have greatly exacerbated this profit-killing problem. Not only has it created a far larger percentage of merchandise being returned but it has altered customers' expectations as to the role of how far sellers should go to make them happy. 

The generous return policies of Amazon have heaped a great deal of grief upon brick and mortar stores. Amazon is granted the ability to offer a generous return policy due to the fact it sells merchandise for third-party sellers, this means Amazon gets paid by those sellers regardless of whether the merchandise is returned or not. 

The ultra-competitive sales and monopolistic policies showered upon us by Amazon continue to destroy brick and mortar stores and small businesses. The tax-avoiding, robot-loving company that makes little in the way of profit from its own retail sales generates sales off charging third parties to handle their sales and shipments as well as a slew of "government business." This leaves brick and mortar companies caught between a rock and a hard place, if they adopt a more stringent return policy they drive customers directly into the arms of Amazon.

Items Bought Online Often Get Returned 

An article on the website delves into how returns are an important part of retailing. Research from The National Retail Federation (NRF) indicates that $428 billion in merchandise was returned in 2020. This was approximately 10.6 percent of total U.S. retail sales for the year. The NRF estimated the cost of these returns at 101 billion dollars. The fact is, today, shoppers expect fast, free, and easy returns. Sadly, into this mix flow unscrupulous shoppers that take advantage of this to rip off retailers.

As mentioned in a prior AdvancingTime article, an issue many people overlook is what eventually happens to all the goods that are returned and how online sales are far more likely to be returned than merchandise purchased in stores. The article also explores how this damages the environment and how many products get sent to landfills unused. With online sales surging over the last few years we can expect massive returns from the holiday season just past. Retail returns in January may turn out to be an interesting indication of the true economy and what we face.  

(Republishing of this article welcomed with reference to Bruce Wilds/AdvancingTime Blog)


Footnote; Below are three links. The first to an Advancing Time article claiming Amazon's business model is not efficient or good for the environment. The second is a link to the article referenced above, and the last is a link to an interesting video where a couple of guys claim they have never seen things worse and blame the current economy and Fed policy.,dollars.%20Shoppers%20expect%20fast%2C%20free%2C%20and%20easy%20returns.

1 comment:

  1. I can vouch for what is in this article. People love easy returns because that means for most they can use stuff for free and return it within the return period.

    I work for a major home improvement company and the store has seen a massive uptick with returned items. It's so bad that the receiving department can't keep up with the items.

    One item in particular (outdoor torch light) was returned and the staff all knew there was nothing wrong with it. It was used for a Christmas party and returned before the customer left to go up north.