Talk about a tease for retailers!
Early holiday shoppers gave stores a glimmer of hope this year by spending a record amount -- more than $52 billion -- over Black Friday weekend. But are they now regretting it? This season’s holiday shopping hangover may already be settling in, as consumers realize they actually need the money they spent on those early, irresistible deals. So, a lot of those discounted TVs and toys are headed back to the store before even making it under the tree.
Return rates started to rise when economic conditions in the country started to fall, and consumers realized they couldn’t spend the way they were accustomed to. Return rates have stayed high over the past few years and are increasing again this year. For every dollar stores take in this holiday season, they’ll return 9.9 cents, up from 9.8 cents last year, according to a survey done by the National Retail Federation. In good economic times, that rate is about 7 cents per dollar.
That may not seem like a lot, but it adds up. Stores expect to bring in $453 billion this holiday season, and holiday spending is important for retailers as they can make up to 40 percent of their annual sales during the last two months of the year. So widespread holiday shopping remorse doesn’t go unnoticed among retailers.
Industry experts say the return rates retailers are already seeing this year are unsustainable. Stores and manufacturers are expected to spend $17 billion reboxing, repairing, restocking and reselling electronics this year, up 21 percent from four years ago. So all those smartphones and TVs that flew off the shelves early this holiday season have packed warehouses full again. Liquidation.com, which buys returned merchandise from big retailers and sells it to small businesses, says return rates are between 12 and 15 percent. That’s two percentage points higher than last year and double the rate in better times. The company says its four warehouses across the country are packed with thousands more items than last year.
Some returns are expected in January, because year after year people continue to insist on giving unwanted gifts, like a Christmas sweater that you wouldn’t even wear to a tacky Christmas party. In fact, 49 million people admit they’ve been stuck with what they would consider an awful holiday gift, according to a Consumer Reports poll. What a waste! That’s about 20 percent of adults nationwide who are receiving something they admit they don’t like and they’ll never use. That’s a lot of money that could be back in the pockets of struggling American consumers.
So what happens to all those unwanted gifts? After that moment of pretend excitement about receiving the awful thing, the study found that about 18 percent of people donate it to charity; 15 percent wrap it back up for re-gifting; 11 percent return it for a refund or store credit; another 11 percent actually throw it in the trash; and six percent try to resell it.
And who’s giving these awful gifts? In-laws and grandparents were among the worst gift-givers, according to those polled. So if you want to avoid unnecessary spending and returning, you may want to have a family chat about holiday gifts before it’s too late.
You may also want to make sure your holiday spending budget is on track, or make one if you haven’t already done so. HLN Money Expert Clark Howard says budgeting is the most important factor in keeping your holiday spending in check, since so many of those deals really can be irresistible. So keep track, spend only what you have, and don’t get stuck with that holiday shopping hangover in January after all of those gifts have already been unwrapped.
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