What Retailers Can Learn From Last Year’s Historic Wave of Holiday Returns

With the holiday shopping season fast approaching, many retailers still remember the onslaught of product returns from the 2021 season. Now as the decorations are about to come back out, business owners are looking to reinforce their operations in case of a repeat of last year.

Statistics from the National Retail Federation (NRF) showed that 2021 saw retailers handling a record-breaking shopping season in which Americans spent $886.7 billion, amounting to a year-over-year growth of 8.5 percent and a record-high amount of holiday sales.

This was no ordinary holiday shopping season. This was historic.

The holiday shopping surge always brings a wave of returns, which experts forecast reached $66.7 billion worth of product returned by the end of 2021. This is where retailers truly felt the squeeze, as many of their operations weren't set up to handle such a logistical burden.

As U.S. consumers’ wallets — and the economy as a whole — continue to catch back up to pre-pandemic levels, all indicators point to another extremely busy holiday shopping season. Record-high sales could well be reality again this year, and so could equally frequent returns.

What lessons can retailers learn from 2021’s historic holiday shopping season to adjust their operations in case the same story unfolds in 2022? And what positive outcomes can be achieved with a painless returns process?

Why is a Painless Returns Process So Important? 

Beyond the operational benefits of a streamlined and painless returns process — which can completely handcuff a retailer and its staff if not properly executed — benefits can be gained in terms of both sales and customer experience when the returns process is convenient and hassle-free for the customer.

Looking at inefficient returns, research shows 80 percent of consumers are deterred by inconvenient returns, and are therefore less likely to return to that retailer for future purchases.

On the flip side, recent research showed that retailers that employed a hassle-free returns policy reported a staggering 300 percent increase in overall sales.

What should retailers be doing to take advantage of such high sales benefits?

While the in-store returns process must be as convenient and hassle-free as possible for customers, this can’t be achieved without warehouse and logistics staff running at peak efficiency on the back-end, facilitating the pain-free returns process customers desire.

Retailers need to be researching new ways to streamline their warehouse and logistics operations and staff while implementing new strategies and technologies to facilitate a returns operation that can hold up to the current retail landscape and the expectations of the modern consumer.

Alternative Return Methods

In recent times, businesses have looked to alternative returns methods as a means of not only providing their customers with more options to fit their lifestyle and schedule, but also of freeing up time and space for their in-store staff by employing designated returns staff who are assigned to a specific returns process.

Here are just a few of the most common alternative returns methods being employed by retailers today: 

• Scheduled curbside returns: By having customers schedule curbside returns, retailers can free up valuable space in their store and ensure no staff must be pulled away from their regular duties to deal with unscheduled returns, which can often throw a wrench into your daily operations.
• Scheduled returns pickup vehicle: By employing a dedicated returns pickup vehicle, not only can you have dedicated staff assigned to it, and therefore can ease unexpected operational issues caused by unscheduled returns, but you also cater to your customer’s schedule and needs with a top-tier customer experience.
• No returns: Shockingly, one of the most popular alternative returns methods being used by retailers in today’s landscape is simply not accepting returns but instead refunding the customer if they're unhappy with their purchase. While this comes with a financial hit, it completely eliminates any operational issues caused by the returns process, which holds value in and of itself.

The Argument for an Output-Based Staffing Solution

Beyond in-store staff, most of the logistical nightmare associated with the returns process falls onto your warehouse staff, as they're relied on to process and house all of the returned goods with the hopes of being resold to recoup some profit.

While many retailers and their logistics partners rely on a staffing model based on headcount, it's difficult to leverage such a model to maximize efficiency and cost savings. Rather, retailers and their warehouse operations should use an output-based staffing model or partner to manage staff based on the amount of returns that need to be processed or the inventory that must be shipped instead of worrying about an arbitrary number of people.

By employing an output-based staffing partner, regardless of circumstance, you're charged based on output and not headcount, such that despite variance in headcount, production, returns levels or market changes, your cost doesn't fluctuate. This ensures that you have absolute budget certainty baked into your returns operations.

Many retailers using output-based staffing have reported improved accountability, more consistent quality standards, and greater efficiency due to a reduction in processing steps, with some reporting increases up to 95 percent total efficiency.

With holiday returns at an all-time high as the giving season approaches — and experts predicting this trend to continue for many years to come — being able to rely on budget certainty and optimal efficiency within your returns operations is an absolute game changer in the modern retail landscape. 

Carl Schweihs is president and chief operating officer of PeopleManagement, TrueBlue’s workforce management division specializing in on-site and contingent workforces.