Shoppers are demanding more ways to return purchases—and they're getting their way

Key Points
  • Consumers want more convenient and flexible ways to return items, including in-store returns for online purchases and designated locations to pick up and drop off packages.
  • Amid competition for market share, retailers such as Target and Kohl's are providing shoppers with more return options.
  • Pharmacies and delivery services are also catering to shoppers. Inc. parking signage stands outside a Kohl's Corp. department store in Huntington Beach, California, U.S., on Saturday, May 11, 2019.
Kyle Grillot | Bloomberg | Getty Images

Traditional return options just aren't doing it for shoppers anymore.

Consumers want more convenient and flexible choices, including more in-store returns for online purchases and designated locations to pick up and drop off packages, according to a global online survey by Narvar.

Narvar, a software company that tracks orders and returns for retailers, found that 13% of the shoppers surveyed in the U.S. dropped off a package at a designated location, and 52% of those shoppers did so because it was convenient. 

In this case, what the customer wants, the customer gets.

Some retailers are already experimenting with these options — Target and Walmart allow customers to return online purchases in their stores, and Kohl's accepts returns for "eligible" items purchased on Amazon at all of its stores.

In July, UPS announced a new partnership with Michaels stores to expand its "Access Point," which allows customers to pick up or drop off prelabeled packages at various brick-and-mortar locations, including CVS and Advance Auto Parts stores.

William Durling, vice president of retail communications at CVS Health, said in a written statement to CNBC that adding the service "provides customers the benefit of having a one-stop shop for all their holiday and health and wellness needs."

"In addition to being a convenient destination for holiday needs, CVS Pharmacy UPS Access Points will help prevent missed deliveries, keep packages safe and secret (so loved ones won't see them arriving!) while also offering evening and weekend pick-up/drop-off hours," Durling said.

How Amazon is redefining the expensive and wasteful process of returns
How Amazon is redefining the expensive and wasteful process of returns

Similarly, FedEx allows customers to pick up and drop off packages at Walgreens. This is a win-win situation for customers and the pharmacies, said Kit Yarrow, a consumer psychologist.

"If people live in an area where there is a lot of door theft, it's a way for them to get their packages," Yarrow said. "And they feel warmly [toward] Walgreens for facilitating that."

Package theft is a concern for online shoppers, especially during the holiday season. A recent survey by Chamberlain Group found that 65% of homeowners get nervous about packages with holiday gifts going missing.

Yarrow said that these designated locations are also convenient for customers who can't pick up and drop off during normal business hours, as stores such as Walgreens tend to be open late. Adding more ways to return items increases the chance a customer will purchase them in the first place, she added.

"Retailers know that people will buy more and take more chances on things that they might be unfamiliar with, like shoes, if they know there might be an easier way to return it," Yarrow said.

In-store returns can also be a good move for retailers because it gets customers in the door. The survey from Narvar, which polled 3,519 people, found that 16% of all shoppers said they buy items they had not originally planned to purchase when making an in-store return.

These in-store returns are a strategic decision by retailers to stay relevant as competition grows, said Anthony Campagna, global director of fundamental research at Institutional Shareholder Service.

Walgreens Boots Alliance Inc. signage displays FedEx Corp. pick up and drop off information outside a store in San Francisco, California, U.S., on Wednesday, Nov. 6, 2019.
David Paul Morris | Bloomberg | Getty Images

"The thought is to help them grow top-line sales," Campagna said. "More people in the stores buying more things more often."

Retailers may see slow growth ahead as competition for market share and the cost of integrating e-commerce with brick-and-mortar stores weighs on sales. The debt rating agency Moody's Investors Service cut this year's operating profit growth forecast for the industry to between 2% and 3% from a prior estimate of 5% to 6% growth. In 2018, retailers' operating profit rose 4.9% from the prior year.

This holiday season, the U.S.-China trade war is also a cause for concern for retailers. The Trump administration's latest round of tariffs took effect in early September and another round is expected to kick off mid-December.

Amid this difficult time for the industry, if in-store returns can get more sales for retailers, "it can help," Campagna said. He said consumers are finicky and demanding more from the marketplace.

"It's [for] convenience's sake, and retailers are catering."