Retailers, meet the ‘returnists’

Shell-shocked consumers picked up a new habit this past holiday season: they returned many of their purchases to get cash back. Returns reached an all-time high with the plummet in confidence nationwide, said the Conference Board. Returns were expected to wind up the year 2008 at $219 billion, well above the $178 billion in 2007 and the $169 billion in 2006, according to the National Retail Federation (NRF). Cash continues to be king in 2009, as the new Obama administration struggles to get the U.S. economy back in order, and shoppers show their persistent malaise. As one shopper who returns unused merchandise told the Boston Globe: “I get cash back. It’s instant gratification.” Said another: “There’s a weird euphoria when you return something. You’re relieved that it’s coming off your credit card.”

Shell-shocked consumers picked up a new habit this past holiday season: they returned many of their purchases to get cash back. Returns reached an all-time high with the plummet in confidence nationwide, said the Conference Board. Returns were expected to wind up the year 2008 at $219 billion, well above the $178 billion in 2007 and the $169 billion in 2006, according to the National Retail Federation (NRF).

Cash continues to be king in 2009, as the new Obama administration struggles to get the U.S. economy back in order, and shoppers show their persistent malaise. As one shopper who returns unused merchandise told the Boston Globe: “I get cash back. It’s instant gratification.”

Said another: “There’s a weird euphoria when you return something. You’re relieved that it’s coming off your credit card.”

Reports link this behavior primarily to apparel, so it’s not yet a problem for supermarkets. Still, the advent of the ‘returnists’ is shaping a tighter retail environment for shoppers to make legitimate returns. According to Joseph LaRocca, vice president of loss prevention at NRF, 17% of retailers recently reduced the time allowed for returns, restricted the number of returns a shopper could make, or charged restocking fees. Conversely, he told the Globe, 11% loosened return policies in an attempt to attract shoppers.

SupermarketGuru.com conducted its own survey of shoppers to see how ‘sticky’ this new habit is. Strikingly, four out of 10 respondents (39%) experience more ‘shoppers’ remorse’ than in the past, and two out of 10 (21%) are returning more purchases. The majority of respondents regard themselves as ‘careful comparison’ shoppers (68%), as opposed to ‘conservative’ (24%) or ‘impulsive’ (8%).

Their primary reason for returning now is a classic one: product doesn’t meet expectations (72%). But ‘changed mind’ (19%), ‘need the money for necessities’ (6%), and ‘feel guilty about spending’ (3%) add up to a significant minority where current budget pressures influence behavior.

There is a close parallel between SG panelists who took the survey and noticed ‘tougher’ return policies by retailers (21%) and the 17% figure cited by NRF.