⚡ Get All Content for 20% Off ⚡

Major Retailers Are Considering Dramatic Return-Policy Changes Target and Walmart may be on an Amazon-like path when it comes to returns.

By Amanda Breen

entrepreneur daily

With fuel prices at record highs and ongoing supply chain turmoil, retailers are struggling to adapt — doing whatever they can to lessen the pressure on themselves.

Now, CNN is reporting that some major retail chains like Target, Walmart, Gap, and American Eagle Outfitters are considering a revamp of their return policies. They might let customers keep refunded merchandise — and Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group, told CNN it makes a lot of sense.

According to CNN, earnings calls in recent weeks reveal that there's an inventory surplus across categories — from clothing to furniture to toys — and storing it all comes at a high price.

Naturally, returns add a significant burden to that storage challenge. According to a survey by the National Retail Federation and Appriss Retail, retail returns hit an average of 16.6% in 2021 — up from 10.6% the year prior — adding up to more than $761 billion of merchandise that's likely to end up back in stores and warehouses.

Related: Target Seeks Edge With New Compensation Strategies

Instating a "just keep it" return policy "would be a smart strategic initiative," Flickinger told CNN. "Retailers are stuck with excess inventory of unprecedented levels. They can't afford to take back even more of it."

If retailers opt to not put returned products back on their shelves, they can give them to liquidators to sell, including foreign liquidators for sale in Europe, Canada, or Mexico, or even enlist third-party firms to take complete control of all merchandise returns. But Flickinger points out that both routes incur extra costs for retailers.

Target and Walmart may be the latest major retailers toying with the idea of letting customers keep refunded merchandise, but they're not the first: Amazon launched a "returnless return" policy for certain cheaper, expensive-to-ship items several years ago.

Related: Walmart Might Soon Be Rolling Out Its Own Cryptocurrency

Of course, a "just keep it" return policy has its drawbacks. Companies will need to carefully monitor customers' purchase-and-return patterns to make sure they're not taking advantage of the system to stockpile free merchandise.

Amanda Breen

Entrepreneur Staff

Senior Features Writer

Amanda Breen is a senior features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business Ideas

55 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.