Returns of holiday gifts purchased online to hit record

NEW YORK ― After the holiday party comes the hangover for retailers: handling millions of returns this week.

With a Christmas season that has seen record e-commerce sales coming to a close, returns should hit an all-time high on Tuesday for United Parcel Service

.The delivery company expects to handle more than 550,000 returns on Tuesday, a record, and up almost 8 percent from a year earlier. Several other days during the first week of 2012 will also top half a million returns, UPS said.

“This will definitely be the busiest year for returns,” Ken Burkeen, marketing director of the retail and consumer products division at UPS, told Reuters.

The good news for retailers is that most of the jump is simply a reflection of the explosive growth in e-commerce this Christmas season: U.S. online sales were up 15 percent between Nov. 1 and Dec. 26, according to data firm comScore.

Burkeen said UPS expects returns to rise 7.7 percent, meaning returns as a percentage of total sales have actually dipped despite more customer-friendly return policies.

A lot of that has to do with how much better web sites have gotten, including the ability to rotate the image of a product 360 degrees.

Diana Ku, a 25-year-old elementary school teacher from the San Francisco area, said she buys more from Nordstrom Inc., in part because of the quality of the photography on the upscale department store chain’s web site.

Such improvements to many e-commerce sites have lowered the risk for a customer like Ku of placing an order only to open a package and find the item wasn’t what she was expecting.

Ku has yet to return a product she bought online this holiday period. “I do return quite a lot normally, but I didn’t this year,” she said.

It’s expensive for retailers to take back products they have already sold, check they are still in good condition, repackage them and integrate them back into inventory for resale.

Kurt Salmon retail strategist Al Sambar said that the returned items often end up in the discount bin, meaning a further danger to margins during a holiday season that has already seen steep discounting.

But retailers have found that easier returns policies, online or off, can be good business.

Nordstrom this year stopped taking $6 off of refunds on returns when an item bought online is mailed back. Kohl’s Corp., a mid-priced department store chain, has long been praised by retail strategists for its policy of accepting returns without receipts.

Even when returns spike, that can be good news. If shoppers know they can bring products back to stores or mail them back to online retailers, they are likely to buy more from that retailer.

“Making it easier to return increases loyalty and doesn’t increase returns per se,” said Fiona Dias, chief strategy officer for ShopRunner, a company that manages returns and shipping for the e-commerce sites of retailers including American Eagle Outfitters and Toys R Us.

“If retailers make it difficult to return, the customer is left with an overall bad taste in their mouth about the brand.”

Retailers adapt as mobile device holiday shopping booms

NEW YORK ― When it comes to holiday shopping, more people are phoning it in, forcing retailers to embrace new ways to connect or else lose sales.

Lowe’s Companies, Best Buy and Toys R Us are among retailers making big changes to prepare for a wave of holiday shoppers who will use smart phones to research products, check rivals’ prices and make purchases.

“The shopping experience is in the consumer’s hands and you can’t fight where they’re going,” said Gihad Jawhar, vice president of Lowes.com, the website of the second-largest home-improvement company. “Retailers can either hop on the bus or get left behind. We are choosing the first option.”

Lowe’s is issuing more than 42,000 Apple iPhones to employees in more than 1,700 stores.

When shoppers are in Lowes stores scanning bar codes with their phones, reading product reviews and checking prices, employees can engage them better using iPhones to track down similar information.Staff can also check quickly if products are in stock or if items are available on Lowes’ website or another store nearby, and can often match or beat a price a consumer finds elsewhere via a smart phone.

Best Buy has 63 so-called connected stores in which employees have been given mobile devices and are encouraged to use their own smart phones to help shoppers research products and check inventory.

“Employees are empowered to make the decision to match a competitor price on the spot,” a spokeswoman for Best Buy added.

More than 40 percent of retailers this year have a policy of at least competing with lower online prices found through mobile comparisons. Ahead of last year’s holiday season, most retailers were still in denial about this trend, according to research firm RSR.

The mobile shopping boom is putting billions of dollars in sales up for grabs in an industry that is being pummeled by lackluster economic growth and weak consumer confidence.

U.S. retail e-commerce holiday sales will rise 17 percent to $46.7 billion in 2011, while total retail sales will grow about 3 percent this season, eMarketer forecast on Thursday.

But mobile commerce is growing even faster.

The 300 largest U.S. mobile merchants, led by Amazon.com Inc, will generate $5.37 billion in sales through mobile devices this year, more than double 2010, according to a recent survey by Internet Retailer.

A recent survey of shoppers by the National Retail Federation found that 40 percent own a smart phone and more than half of those people plan to use their device to research products or make a purchase this holiday.

The peak day for mobile holiday shopping is expected to be the second Sunday in December (Dec. 11 this year), according to PayPal, the online payments business owned by eBay Inc. That’s the last non-work day when orders will be shipped in time for Christmas.