Member Article

£160m of stock returned due to Black Friday

While online sales from Black Friday 2015 are predicted to exceed £1bn in a single day*, trading from this promotion could prove a costly exercise for retailers, a new report by returns intelligence company, Clear Returns, warns.

The ‘Playing For Keeps’ report predicts that returns generated from Black Friday alone will cause £160million of stock to be sent back, meaning it becomes caught up in the ‘returns loop’ during the critical Christmas sales period – and unavailable for customers to buy at exactly the point retailers want to be selling.

What’s more, the report suggests the cost of handling returned goods from this year’s Black Friday will cost retailers over £130million, rising to £180million once lost margins, cleaning and storage of products, and lost customer life time value are factored in. Indeed, 80 percent of first time buyers who return an item will not shop with that brand again.

Vicky Brock, CEO and founder of Clear Returns, commented: “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% 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.”

And, with major retailer, Asda, scaling back its participation in this year’s event, the report further calls into question the effectiveness of Black Friday as a sales promotion, traditionally used as a marketing strategy by retailers to kick off consumers’ festive spending.

The report suggests Black Friday sales will create Out Of Stock Saturday on 12 December – the day during the Christmas period where the largest number of retailers’ stock will be tied up in the returns loop and unavailable to buy, leading to disappointing customer experiences and further loss of margin.

Brock concluded: “A ‘sale’ is only a ‘sale’ when the customer decides to keep a product, so retailers need to be playing for ‘keeps’ as opposed to ‘sales’ to maximise margins during the critical Christmas trading.”

For further information on how retailers can help customers keep more of what they buy and minimise the impact of returns, download the full report: http://clearreturns.com/getthefacts/.

This was posted in Bdaily's Members' News section by Chelsea Reay .