Retailers stuck with unsellable stock after granting high volume of returns

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Retailers are struggling to cope with the volume of refund requests they feel obliged to grant, despite items being unfit for resale, new research from Barclaycard has revealed.

Store managers are stuck between accommodating shoppers’ demands and balancing their bottom line, with almost six in 10 (57%) giving refunds regardless of product condition to maintain a positive relationship with customers.

Not including faulty or damaged stock, merchants estimate that 26% of goods refunded are unfit for resale.

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This is resulting in stockrooms filling with unsellable items, including products which have clearly been used (48% of unfit items returned), are marked (29%) or have parts missing (28%).

Accepting that the issue is not going away, a fifth (22%) of retailers have introduced a new system to dispose of stock they cannot resell, Barclaycard found from its study on 300 retailers.

One in ten (11%) have partnered with a reseller to resell items on at a loss, but such is the volume of stock that eight per cent have even moved to a bigger warehouse to store unwanted goods.

On the other hand, some retailers have opted to restrict their policies in a bid to cut the level of returns, particularly for online purchases.

Driven by the buy-and-return habits of so-called ‘serial returners’, 37% of merchants admit that they do not offer free returns as a way to discourage shoppers from returning non-faulty items. A further 12% have stopped offering this service because it became too expensive.

But retailers’ decisions to restrict returns policies could ultimately be having a negative impact on their business, Barclaycard said.

More than a third (36%) of consumers claim they would be put off shopping somewhere if there was a charge to return items by post or courier.

Consumers are also looking to retailers to provide multiple options for how to return items (49%), refunds instead of credit notes (46%) and a long window for returns (40%).

Sharon Manikon, customer solutions director at Barclaycard, said: “In the 21stcentury, where we can buy as much as we please at the touch of a button, shopping is no longer just a necessity, it’s a well-loved hobby. Retailers are faced with the difficult task of ensuring they can manage the influx of returns which comes hand-in-hand with online and impulse shopping, without compromising their bottom line, or their relationship with customers.

“Our research demonstrates that offering a good returns policy can help retailers attract and retain customers. However, it’s also crucial to be clear on when customers can and can’t return items to limit the amount of unsellable stock. This will be particularly important in anticipation of major shopping events such as Black Friday, when retailers are likely to see a spike in sales and, subsequently, returns.”

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