Holiday shoppers flock to stores for returns and deep discounts
BY SANDRA GUY Business Reporterfirstname.lastname@example.org December 26, 2012 6:36PM
Shoppers crowded the stores on State St. (at Washington) on the day after Christmas. | Rich Hein~Sun-Times
Updated: January 28, 2013 4:01PM
This year, the day after Christmas is expected to mark the biggest gift-return day of any holiday season, and Chicago shoppers lined up Wednesday as if to prove the forecast correct.
Shoppers with receipts and bags of wrongly sized, mistaken and unwanted presents in hand underscored AlixPartners analyst Joel Bines’ forecast that return volume will hit an all-time high because so many retailers offered free shipping this year.
“The rate of returns and exchanges will be 10 percent to 15 percent higher for any given retailer this year than they typically are,” Bines said Wednesday.
The reason? Brick-and-mortar retailers are being forced like never before to compete with online retailers by offering free shipping, and in many cases, free return shipping of orders of all sizes, Bines said.
“Free shipping removes an impediment to consumers’ reluctance to buy so much, because they know they can freely ship it back or return it to the local store,” said Bines, the managing director who runs the retail practice at the Southfield, Mich.-based consulting firm.
Estimates show 15 percent to 20 percent of holiday gifts are returned or exchanged. That’s a big number, given that the National Retail Federation forecasts this year’s holiday retail sales will total $586.1 billion.
Michelle Washington, 49, an events specialist who lives in the South Loop, returned a zip-front fleece jacket and a pair of corduroy pants she bought online at Old Navy for her mother because they were one size too big.
Washington returned the goods to the Old Navy store in the Loop on Wednesday so she could avoid shipping the goods back, and so she could meet her mother to try on the clothes and find the right fit.
“Mom wants to take a look for herself,” she said.
Samantha Sims, 36, a Kenwood resident and ninth-grade English teacher at King College Prep High School, returned a “Just Dance 4” music video game to the CityTarget store in the Loop because she had chosen the wrong format.
The game, for Sim’s daughter, 8-year-old Elizabeth Sims-Wilson, had to be formatted for the Wii U, and Sims had mistakenly grabbed one for the Microsoft Xbox.
Elizabeth nodded her approval as her mom pulled the correct version out of her shopping bag.
Oliver Haimson, 32, a recent economics graduate of Carnegie Mellon University, was on his way to Kohl’s to exchange a too-small winter hat that his mother had bought him for one that fits.
Chicagoans returning to stores on the traditionally largest gift-return day enjoyed a bonus this year. With what could turn out to be the lowest holiday sales in four years, shoppers surveyed aisles of heavily discounted goods throughout local stores.
Amid the return aisles, shoppers snapped up sales ranging from 30 percent at Anthropologie to clearance discounts as high as 75 percent at Macy’s, Target, Kmart and Kohl’s.
The first holiday spending report to be published, Mastercard Advisors SpendingPulse, showed Wednesday that sales from Oct. 28 through Dec. 24 eked out an 0.7 percent increase from a year ago, compared with retail industry forecasts of jumps of 3.5 percent to 4.5 percent.
Michael McNamara, vice president of Mastercard Advisors SpendingPulse, said sales of electronics, jewelry, specialty apparel, leather goods and furniture took a hit from shopper worries about how the “fiscal cliff” may hurt their pocketbooks and tough winter weather ranging from blizzards to Hurricane Sandy.
A clearer picture will emerge next week as retailers like Macy’s and Target report monthly sales.
McNamara said the final week in December can account for more than 15 percent of retailers’ sales for the month, so “there is an opportunity for retailers to make up some ground.”
Indeed, National Retail Federation spokeswoman Kathy Grannis maintained Wednesday the retail group’s 4.1 percent sales-increase prediction.
“It’s too early for us to gauge how sales have fared,” she said. “This is the beginning of another very big week for retailers, and we are still expecting sales to increase 4.1 percent.”
But analyst Adam Hanft, CEO of Hanft Projects, a brand consultancy firm in Manhattan, said he sees a “fundamental” shift downward in spending as Baby Boomers worry about retirement, Millennials owe big student loans and are less materialistic than their parents, and Generation Y (ages 18-29) experience high unemployment.
“There is a deeper consumer malaise at work,” Hanft said. “I don’t see any turnaround soon.”