Up to 10% of all refunds for the year will hit UK retailers between Boxing Day and late January, according to a returns specialist.
Vicky Brock, CEO of Clear Returns, a retail returns specialist, warns: “With consumers increasingly buying first and choosing later, returns will become a significant pain point for retailers in the period following Christmas, as unwanted Christmas gifts are sent back. Our data shows that up to 10% of all refunds for the year will hit UK retailers between Boxing Day and late January.
“These returns are unlikely to be processed until well into the New Year, resulting in a cash-flow hell for retailers which could cause them to enter negative trading once corporation tax and rents are due.
“This Christmas we have seen an unprecedented level of discounting with retailers extending their promotions over much longer periods – and the same can be seen for Boxing Day, with many retailers starting offers earlier this year and running offers well into the New Year.
“This is causing ‘hedge spending’ behaviours amongst consumers, whereby shoppers buy an item at full price and then wait to see if it features in the post-Christmas sales. They then buy the reduced product and return the full priced item – meaning a triple hit for retailers: not only do they lose margin on the sale item, they foot the bill for the cost of the return and, by the time the refunded item is processed, it re-enters the store at a marked down price, causing further loss of profits.”