Retailers brace for deluge of returns after Boxing Day bonanza

Australian retailers are bracing for a sting in the tail from a bumper Christmas and Boxing Day sales period, with a record number of customers expected to return their goods in the coming weeks.

Australian Retailers Association (ARA) CEO Paul Zahra said the deluge of returns will be driven by the huge uptake in online shopping during the periods of COVID-19 lockdown and could potentially weigh down the already tight profit margins of the retailers.

The shift in online sales is expected to create headaches for retailers in the coming weeks.
The shift in online sales is expected to create headaches for retailers in the coming weeks. Credit:Getty

People stuck inside who went without regular exercise for much of 2020 were now unsure about their size, which meant more clothing would be returned, Mr Zarah said.

He added that retailers will also have to contend with the global trend of “bracketing”, where customers buy multiple sizes, colours or styles of a product, keep the one that suits them and returns the rest – often with the retailer paying for shipping.


“It only happens in the online world because if you go into a store, most people try it on,” Mr Zahra said. “But in the online world it’s significant, which is why we’re expecting in the retail industry to have record returns this year because there’s been such a shift to online trading.”

Australia Post says that online shopping grew 45 per cent in the year to November 31, with more than more than 200,000 households in the first 10 weeks of COVID-19.

A recent US survey by online retail platform Narvar found 60 per cent of online shoppers engaged in some form of bracketing, with 40 per cent of those doing so because their weight had fluctuated and they were no longer sure of their size. A third did so because they could not try things on in store due to COVID.

Mr Zahra said there was no firm local data but anecdotally major retailers were telling him it was a major issue for them this year. They had to wear the labour cost of processing returns and often the postage, while products sold at full-price before Christmas having to be discounted after they were returned.

Overall retail sales jumped 13 per cent in November compared to a year earlier, according to preliminary figures from the Australian Bureau of Statistics. That was driven by Victoria where sales jumped 21 per cent following the lifting of lock down restrictions.

Mr Zahra added that early reports back from retailers on Boxing Day sales so far had been strong, supporting the ARA’s forecast for online sales to offset a decline in foot traffic and industry-wide sales to grow by almost 4 per cent from last year to hit $19.5 billion.

However, Steve Kumar from consultancy Retail Oasis said the expected explosion in returns may turn out be a fizzer, given the boom in online shopping during COVID-19 was mostly driven by older people trying it for the first time.

“The one thing we do know about the older groups is they do tend to be a lot more cautious, they tend to be a lot more considered,” Mr Kumar said. “Therefore if they order something online they’re a lot more likely to check every before they order it.”

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