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Shoppers are returning bargains well before Christmas

Workers prepare returned TVs to be resold by Liquidity Services last week in Cranbury, N.J. Liquidation.com has four warehouses full of returned merchandise. Electronics, especially, are being returned rapidly. Stores lose as much as 50 percent on returned electronics.

Associated Press

Workers prepare returned TVs to be resold by Liquidity Services last week in Cranbury, N.J. Liquidation.com has four warehouses full of returned merchandise. Electronics, especially, are being returned rapidly. Stores lose as much as 50 percent on returned electronics.

NEW YORK — Ah, the warm feelings of the holidays: comfort and joy.

And buyer's remorse.

Some people who rushed to snag discounts on TVs, toys and other gifts are returning them for much-needed cash. The shopping season started out strong for stores, but it seems the spending binge has given way to a holiday hangover.

Return rates spiked when the Great Recession struck and have stayed high. For every dollar that stores take in this holiday season, they'll have to give back 9.9 cents in returns, up from 9.8 last year. In better economic times, it's about 7 cents.

This time of year, fractions of a penny add up. Stores are expected to take in $453 billion during this year's winter holidays. Merchants make up to 40 percent of their yearly sales in November and December.

Returns are typically more associated with January than December. But these days, more is going back before it ever gets to Santa's sack.

"When the bills come in and the money isn't there, you have to return," said Jennifer Kersten, 33, of Miami. She spent $300 the day after Thanksgiving on books, movies and clothes for her nephews. Last week she returned half of it.

Some reasons for the many unhappy returns:

• Shoppers are bingeing on big discounts. Stores are desperate to get people in the door. But the same shoppers who find a "60 percent off" tag too good to resist may realize at home that they busted the budget.

• Stores have made it easier to take things back. Nordstrom, which used to charge $6, is letting online shoppers return items at no extra charge this year. Other stores are offering more time to return or rolling out "no questions asked" policies — no tag or receipt required. But that can backfire.

"Spurring more returns wasn't part of the plan," said Al Sambar, a retail strategist for consulting firm Kurt Salmon.

• Stores are undercutting one another in a tough economy. Wanda Vazquez spent $39.99 at a New York Target on iPad speakers for her 12-year-old daughter, then returned them when she found something similar for $16.99 at Marshalls.

Consumer electronics in particular are being returned at a rapid clip. Stores and manufacturers are expected to spend $17 billion reboxing, repairing, restocking and reselling electronics this year, up 21 percent from four years ago.

Several retailers declined to talk about returns. But if they need any evidence of growing remorse among their shoppers, all they have to do is look at the overstuffed aisles of liquidator warehouses.

Liquidation.com, which buys returned merchandise from big stores like Walmart and auctions it to small businesses and dollar stores, says return rates are 12 to 15 percent, up 2 percentage points from last year and double the rate in better times.

Its four warehouses across the country are packed with thousands more smartphones, TVs and other holiday castaways than a year ago, said Bill Angrick, chief executive of the site's parent company, Liquidity Services.

To get rid of all that extra stuff, the company says it is holding 20 percent more online auctions than it did last year. The company declined to say how many it was holding. "This is going to be a record year for returns," Angrick said. "People are still reluctant to spend."

Stores are already being squeezed by rising costs for materials and labor. Returns make it worse. When you return a sweater, a paid worker has to restock it. Return a computer after just turning it on, and the hard drive has to be scrubbed.

It adds up to lost dollars for stores, which have to eat as much as 12 percent of the cost for returned clothes and 50 percent for returned electronics.

Shoppers are returning bargains well before Christmas 12/14/11 [Last modified: Wednesday, December 14, 2011 10:01pm]
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