Post-Christmas returns: Do you know where your receipts are?
Give a gift. Get a gift. Return a gift. It’s a Christmas tradition.
About one of every five people expects to return a gift after the holidays, according to a poll by Consumer Reports.
But at the Fireworks Gallery gift shop at Westlake Center in downtown Seattle, returns were well under way even before Christmas, yet another reminder of a difficult economy.
Manager Kerry O’Neil said at least 20 shoppers came into the store in the past two weeks to return merchandise they had planned to give as gifts but decided they could no longer afford.
“The feedback I’m hearing is, ‘Oh, I overspent,’ or ‘I didn’t realize how much it cost,’ ” O’Neil said. “They get home and see five or maybe 20 bags on the counter and go, ‘Oh my gosh.’ ”
The good news for cash-strapped shoppers is that returning a gift shouldn’t be much tougher than in previous years. The bad news? It also isn’t likely to be much easier because return fraud remains a concern.
Eight of every 10 retailers have the same holiday-return policies as 2008, according to the National Retail Federation. About 17 percent told the retail group they’ll be tougher, while 4 percent said they’ll loosen their rules.
The retail federation estimates return fraud will cost retailers $2.7 billion this holiday season, a big chunk of the $9.6 billion loss predicted for all of 2009. The trade group also figures that one of every 16 returns will be fraudulent, down slightly from last year.
National Retail Federation counts as fraud such ploys as returning stolen merchandise or concocting a fake receipt to get cash, as well as taking back merchandise after it’s been used for instance, buying a perfectly fine New Year’s Eve dress, then pretending it didn’t fit.
To fight fraud, many stores require a receipt for a refund and charge a restocking fee on major purchases that are returned without their original packaging.
Some stores also have begun making price tags on clothes more visible affixed to an arm pit rather than the base of the neck and they won’t take merchandise back if the tags are removed, said retail federation spokeswoman Ellen Davis.
Still, stores know they can lose out on sales if their return policies are deemed too restrictive, possibly explaining why large chains such as Best Buy, Wal-Mart and Sears have extended their holiday-return deadlines for some electronics and other products.
Nationally, holiday sales are expected to be anywhere from slightly better to a little worse than the dismal season last year.
A lenient return policy can give stores a competitive edge, said Richard Galanti, chief financial officer at Issaquah-based Costco Wholesale. He said Costco “bends over backward” to accept returns at its members-only stores, boosting its membership-retention rates.
“We’ll get high ratings on customer service, when we don’t have a lot of customer service,” he said. “It’s because people trust us, and they get great products at the best price.”
After the financial-sector meltdown in late 2008, Galanti recalled, some at Costco worried that customers would scour their closets for returnable merchandise. But that didn’t happen. Returns as a portion of overall sales are down slightly from last year, he said.
Maybe it’s “because people are more discerning when they do purchase,” he said. “People probably are spending more wisely and buying things that perhaps are more functional.”
A National Retail Federation poll of people’s return practices came to the same conclusion as Costco: Despite the recession, about 67 percent of respondents said they did not return any gifts last holiday season, up from 65 percent in 2007.
The current uptick in practical purchases think more blenders, less bling plus the popularity of gift cards both lead Davis, of the retail federation, to predict fewer returns this season.
“Books, toys, clothing, small appliances and electronics generally are well-received because people can use them, not only immediately, but every day.”
Others contend that a widespread emphasis on needs vs. wants could have the reverse effect. Jeff Green, a retail consultant in the San Francisco Bay Area, thinks cash-strapped shoppers are more likely to return gifts, making an already-difficult holiday-sales season even more difficult.
“If you get something you don’t need or want, you’ll probably return it so you can get the cash and buy something you need,” Green said. “It’s really going to be a not-great season.”
O’Neil, the manager at Westlake Center’s Fireworks, said she isn’t so sure that an increase in pre-Christmas returns will mean more post-Christmas returns as well. With debit-card transactions recently surpassing credit-card transactions at the store, she said, many shoppers appear to be thinking carefully about their purchases.
Whether a gift gets returned could depend on how the recipient answers this question: Do I need it?
“In previous years, when you were given that sweater you didn’t want or need, you might have just kept it, or given it to Goodwill or a friend,” O’Neil said. “I think this year, people will be taking it back for store credit” and buying something they need.