Retailers weigh the cost of paying customers to keep unwanted items
Check out what’s clicking on FoxBusiness.com.
Some store chains consider paying customers to keep unwanted items instead of returning them, as stores struggle to keep too much inventory.
Target, Walmart, GAP, American Eagle and other large retailers have too much inventory of training clothes, jackets, hoodies, garden furniture and toys, among other products, and are charged with the cost of storing the goods.
A shopping cart stands in front of a Target store. (iStock / iStock)
The large number of items, not including returned items, has created a stock surplus.
Because of this, some retailers consider whether to just refund the customer the money they paid for the item, but still allow them to keep the unwanted product.
DAILY HARVESTING SAYS PATHOGEN, TOXICOLOGICAL RESULTS ‘NEGATIVE SO FAR’ DURING FRENCH LENS LETTERS TESTING
“It would be a smart strategic initiative,” said Burt Flickinger, retail expert and CEO of the retail consulting firm Strategic Resource Group, according to the Washington Examiner. “Dealers are stuck with excess inventory of outstanding levels. They can not afford to take back even more of it.”
WALMART, SAMS CLUB INCREASES SALARIES FOR Pharmacy Technicians
Items for sale in store. (iStock / iStock)
According to Flickinger, retailers often evaluate returned items to determine whether to place them back on store shelves. Damaged items can be refurbished and sold at a reduced price or can be transported to liquidators for resale.
“Given the situation at the ports and the shortage of containers, it is not really an option to send products abroad,” said Flickinger.
Regardless of which option is chosen, handling a return retailer costs extra money.
CVS, RITE AID, WALGREENS OFFERING EXTRA COVID BOOSTER SHOTS ABOUT THE COUNTRY
A Walmart truck is driving on the highway on a cloudy day. (iStock / iStock)
“For every dollar in sales, a retailer’s net profit is between one cent to five cents. With returns, for every dollar in returned items, it costs a retailer between 15 cents to 30 cents to handle it,” Flickinger said.
Should retailers decide to implement the “keep it” policy, they run the risk of customers trying to play the system by asking for returns to receive items for free.
GET FOX BUSINESS ON THE MOVE BY CLICKING HERE
“One thing retailers need to track and ensure is that customers who become aware of the policy do not start abusing it, by seeking free items across a range of orders by getting a refund, but retaining the items,” Keith Daniels, a partner with Carl Marks Advisors, sa.
