Saturday 12th December has been dubbed “Out of Stock Saturday” by analysts Clear Returns, as it will be the day when the largest number of retailers’ stock will be tied up in the returns loop and unavailable to buy.
Clear Returns has calculated that £160 million worth of “stock on loan” will permeate the system as a direct result of Black Friday.
Its report, Playing for Keeps, said that although products will be returned, they won’t be available to purchase because they won’t have been processed – this means disappointed customers and potentially having further negative impacts on margins.
The report points out that this is just from a single day’s trading. If returns from other promotional days like Cyber Monday and early December purchasing are factored in, there may be a further “£600million stock tied up in the returns loop by mid-December.”
Vicky Brock, CEO and founder of Clear Returns, said: “On the surface, Black Friday is a successful key trading day, but it’s a gloomier picture once returns are factored in. Our data suggests the true cost of acquiring customers during such promotions is likely to be very high; at peak trading periods anything between 15-50 per cent of promotional items might be returned at a time when staff will be stretched to fulfil other more profitable orders in the run up to Christmas.”
Clear Returns have also said that there may be further costs of up to £180m in the handling, cleaning and storage of returns. This cost also incorporates lost customer lifetime value, as, according to the report, ‘80 per cent of first time shoppers who return won’t buy from that brand again’.
The report also suggests that the cost of returns over the Christmas period may “stretch well into January”, as some retailers extend return policies during the festive season.