Skip to main contentSkip to main content
You have permission to edit this article.

Just keep your returns: Stores weigh paying you not to bring back unwanted items

  • 0
Target shopper

A customer exits from a Target store on May 18, 2022 in Miami, Florida. The chaotic mix of record fuel prices and an unending supply chain crisis have retailers considering the unthinkable: Instead of returning your unwanted items, just keep them.

The chaotic mix of record fuel prices and an unending supply chain crisis have retailers considering the unthinkable: Instead of returning your unwanted items, just keep them.

In recent weeks, some of the biggest store chains, including Target, Walmart, Gap, American Eagle Outfitters and others have reported in their latest earnings calls that they have too much inventory of stuff ranging from workout clothes, spring-time jackets and hoodies to garden furniture and bulky kids' toys. It's costing them tons of money to store it.

Now add on to that glut another category of product that stores have to deal with: returns.

So instead of piling returned merchandise onto this growing inventory heap, stores are considering just handing customers their money back and letting them hang onto the stuff they don't want.

"It would be a smart strategic initiative," said Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group. "Retailers are stuck with excess inventory of unprecedented levels. They can't afford to take back even more of it."

Returned products are handled in a number of different ways, he said. Retailers take back merchandise from the customer, evaluate it, and if it's in good condition put it back on the shelf at the same or lesser price.

They can refurbish damaged returns and sell them for less or offload them to liquidators to resell. They also can sell returned products to foreign liquidators for sale in Europe, Canada or Mexico.

"Given the situation at the ports and the container shortages, sending product overseas isn't really an option," said Flickinger. Lastly, retailers can hire third party firms to handle all aspect of merchandise returns for them.

Each of these options, however, tack on additional costs for retailers, he said.

"For every dollar in sales, a retailer's net profit is between a cent to five cents. With returns, for every dollar in returned merchandise, it costs a retailer between 15 cents to 30 cents to handle it," said Flickinger.

Listen now and subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | RSS Feed | Omny Studio

There is one other option for retailers to address returns while avoiding more product bloat and that's to consider a 'returnless return,' said Steve Rop, chief operating officer with goTRG, a firm that processes over 100 million returned items annually for companies like Wal-Mart, Amazon and Lowe's.

Just keep it

Rop said his company's clients are 100% considering offering the "keep it" option for returns this year, although he wouldn't disclose if any of his customers have implemented the "Keep it" returns policy yet.

In some instances, when they determine it would be easier, some retailers advise customers to just keep or donate their return after issuing a refund. Walmart said it had nothing to share at this time. Lowe's didn't provide a comment for the story.

"They're already discounting in stores to clear out products but, when there's heavy discounting, buyer's remorse goes up. People are tempted to buy a lot to only return it later," he said.

Refunding customers while simultaneously letting them keep their returns isn't a new practice, said Rop. "It started with Amazon several years ago," he said.

The offer makes sense for some types of products -- lower price-tier bulky items like furniture, kitchen appliances, home decor, baby chairs, walkers, strollers where it's costly for the retailer to cover the shipping cost for the return.

"Other products like kids' toys, footwear, towels and bedding raise sanitary concerns when it comes to returns. It could also apply to these categories," he said.

Another concern with cheaper items: Stores typically discount returned products, so the amount of money they can make on an inexpensive return is miniscule -- and may not be worth the tradeoff, says Keith Daniels, partner with Carl Marks Advisors.

Still, a "keep it" policy has its own disadvantages, namely: Companies will need to ensure that they don't become victims of fraud.

"One thing retailers need to track and ensure is that customers that become aware of the [Keep it] policy do not begin to abuse it, by seeking free merchandise over a series of orders by getting a refund but getting to keep the merchandise," said Daniels.


™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

When President Joe Biden announced a plan to forgive student loan debt, many borrowers who kept making payments during the pandemic wondered if they’d made the right choice. Borrowers who paid down their debt during a pandemic freeze that started in March 2020 can in fact get a refund — and then apply for forgiveness. But the process for doing that hasn’t always been clear. The Department of Education says borrowers who hold eligible federal student loans and have made voluntary payments since March 13, 2020, can get a refund.

Moving season is almost over. But if you're one of the many people settling into a new home right now, you might feel like the furniture-buying season is just getting started. And that can get expensive.

Hotels, restaurants and other businesses along Florida's southwest coast face a long rebuilding process after Hurricane Ian. Damage assessments began Thursday. Fort Myers took a direct hit, as did Sanibel, a barrier island dotted with tourist resorts. The damage appears to be lighter in the Orlando area, home to Walt Disney World and other theme parks. Disney says the park is closed while crews assess damage and clear debris. Some airports are already reopening, and two of the biggest, in Orlando and Tampa, plan to resume flights on Friday morning, according to federal officials.

Hurricane Ian was over southwest Florida for just a few hours. It’ll take months to clean up all the damage. Maybe longer. And local officials some of the destruction can’t be cleaned up at all. From trees getting ripped out of the ground to signs being ripped apart, traffic lights crashing onto roadways and some buildings simply being destroyed, the impact was everywhere and almost nothing was spared. The only difference between one place and the next was the severity of the problems.

Russian President Vladimir Putin has granted Russian citizenship to Edward Snowden, a former contractor with the U.S. National Security Agency. He has been living in Russia since 2013 to escape prosecution in the U.S. after leaking classified documents detailing government surveillance programs. He was granted permanent residency in 2020. Snowden has said he made the disclosures because he believed the U.S. intelligence community had gone too far and wrongly infringed on civil liberties. Snowden, 39, is considered by supporters to be a whistleblower who wanted to protect American civil liberties,  He currently faces charges of unauthorized disclosure of U.S. national security and intelligence information that could result in decades in prison.