By Marlene Kennedy/For The Leader-Herald
Conventional wisdom holds that half of shoppers returning an item will buy something else before leaving the store.
So why is retailer Target making it easier for them to never leave their cars?
“The best guest-set for Target are the ones that interact with all of our various ways of interacting with them. … So our approach is just to continue to lean into where they want us to go,” says John Mulligan, executive vice president and chief operating officer, explaining the reasons behind the company’s new drive-up return service. Piloted last year, it should be available in all stores by summer’s end.
For a parent with a child in the car who needs some milk and to make a return, the new service creates “ease,” he said. “I show up; they [a Target worker] bring the milk, they take that [return] away, and I’m off on my day again. And then on Saturday, we’ll come in and do the stock-up trip.”
Executives underscored the new initiative in a late February conference call with analysts on fourth-quarter and full-year results. According to the company’s earnings release, its same-day services, including in-store pick-up, drive-up and home delivery, rose in the fourth quarter and accounted for more than 10% of total sales.
Target reported 2022 sales of $109 billion, up $3 billion from 2021.
Aside from shopper convenience, the new return option helps Target, too.
“[I]t brings more efficiency to our returns process with more resale opportunities and fewer expenses for mail-in returns,” Mulligan said.
A white paper from IHL Services, a retail technology advisory firm, cited in a webinar it hosted last week, noted that returns represent a loss to a seller, due to labor-handling costs and the discounting that may be needed for resale. Some returns have to be shipped to warehouses if they’re out-of-season, to a manufacturer if defective, or to a liquidator if there’s no hope of resale.
The National Retail Federation reports that for every $1 billion in sales, the average retailer sees $165 million in merchandise returns. Meantime, for every $100 in returned merchandise accepted, retailers lose $10.40 to return fraud, which includes used or shoplifted merchandise.
The trade group expected 2022 returns to reach $816 billion, the bulk of that ($603 billion) from in-store sales, the rest from sales online. For either format, about 10% of the returns will be fraudulent.
Target CEO Brian Cornell told analysts that as drive-up, pick-up and home delivery expanded over the past three years, the company wondered whether store traffic would be affected but saw that wasn’t happening.
“As guests use all of our capabilities, they actually spend more dollars in store and just reward us with more trips,” he said. “… And I think we’ll just deepen that engagement as we give them another easy solution for returns.”
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]