Amid the ongoing global supply chain challenges, many retailers in the United States are grappling with surplus seasonal stock, leading to increased storage costs outweighing potential sales. Compounded by the issue of returns, retailers are contemplating a unique solution – offering customers the option to retain unwanted items when seeking refunds.
Certain US stores are pondering a policy that would permit customers requesting refunds to not only receive their money back but also retain the merchandise. While unconventional, this approach proves more cost-effective than storing excess inventory either in retail outlets or warehouses in the long run.
Burt Flickinger, managing director of retail consultancy Strategic Resource Group, highlighted the rationale behind this strategy, stating, “It would be a smart strategic initiative. Retailers are stuck with excess inventory of unprecedented levels. They can’t afford to take back even more of it.”
Flickinger further pointed out, “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.”
Typically, retailers with surplus unclaimed or unsold goods would export them for liquidation abroad. However, given the challenges at shipping ports as part of the broader supply chain crisis, this option is no longer viable.
The primary challenge associated with this proposed approach lies in preventing fraudulent activities. Allowing customers to retain both their money and the items could potentially expose retailers to fraud risks. Hence, strict protocols and safeguards would need to be implemented before this concept can be put into practice.
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