Several of the United States’ biggest store chains are now considering paying customers to keep their unwanted items instead of returning them.
Stores such as Target, Walmart, Gap, American Eagle Outfitters and others have reported too much inventory that has cost them significant finances to store, according to recent earnings calls via CNN.
Now, stores are considering just paying customers back the full price initially paid to keep the unwanted items purchased, according to Steve Rop, chief operating officer with goTRG, which processes more than 100 million returned items annually to companies such as Walmart, Amazon and Lowe’s.
Rop confirmed his company’s clients are already in considering the ‘returnless return’ option, though not disclosing whether any have already implemented the policy.
Rop said in some cases it would be easier for retailers to tell customers to keep or donate the item after having already issued the refund, though Walmart and Lowe’s didn’t provide comments when asked by CNN to address the report.
“They’re already discounting in stores to clear out products but, when there’s heavy discounting, buyer’s remorse goes up. People are tempted to buy a lot to only return it later,” Rop said.
Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group is also in favor of the change.
“It would be a smart strategic initiative,” Flickinger said via CNN. “Retailers are stuck with excess inventory of unprecedented levels. They can’t afford to take back even more of it.”
There are various ways returned products are handled, according to Flickinger. Retailers take the returned items and evaluate them to see if they’re in good condition and, if so, they are placed back on the store’s shelves at the same or a lesser price.
Returned items can also be refurbished if damaged and sold for less or sent to liquidators to be resold, as well as foreign liquidators to be sold in Europe, Canada and Mexico, according to Flickinger.
“Given the situation at the ports and the container shortages, sending product overseas isn’t really an option,” said Flickinger.
Additionally, stores can also hire third party firms to determine how to handle returned products. But each of the options has come at a costly price for the retailers.
“For every dollar in sales, a retailer’s net profit is between a cent to five cents. With returns, for every dollar in returned merchandise, it costs a retailer between 15 cents to 30 cents to handle it,” Flickinger said.