Holiday returns, after Christmas sales begin

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It's a busy day for retailers as those gifts that just didn't work come back to stores and as people looking for post-holiday deals hit the aisles. (WLS)

It's a busy day for retailers as those gifts that just didn't work come back to stores and as people looking for post-holiday deals hit the aisles.

Though the cold weather had some people thinking twice about making those "day after" Christmas returns, shoppers hit the stores in full force and made returns.

Holiday sales are up this year, but so are the chances you didn't exactly love the gift you got. But it's the thought that counts.

"None of them know my size, I'm really small so everything was too big," said Briana Buckley, a shopper exchanging Christmas presents Tuesday.

Shopper Briana Buckley said she loved some of her presents this year but she wanted to take the first opportunity to return some of the gifts that she didn't exactly adore.

Gift-givers seemed to understand.

"I'd rather them return it rather than not use it," said Crystal Blease, another shopper exchanging Christmas presents.

The day after Christmas has come to be known as "return day." It marks the beginning of a 30-day return period for tons of retailers.

It's no secret to shoppers like Jennifer Clay, who said she didn't want to waste a minute exchanging the new charm she got on her bracelet.

"It was convenient. There's not as much traffic because the hoopla of Christmas is over so this was the day to come - and they had a sale, too!" said Jennifer Clay, who was exchanging a gift.

They came to exchange but stayed for the sales as many retailers started slashing prices after Santa's visit.

During the week between Christmas and New Year's, customers are expected to spend $69 billion, according to the firm Customer Growth Partners. That's about 11 percent of all holiday spending.

According to the National Retail Federation, about 5 percent of shoppers plan to do their final Christmas shopping after Christmas Day.

That is, if they're willing to brave the elements. Many shoppers at Water Tower Place said the arctic cold almost stopped them from coming out.

"It really has been more busy in the past and I think that really has to do with the cold temperatures," said shopper Kara Dahnke.

Store managers said this whole week is pretty busy with exchanges since the return period usually only lasts about 30 days.

THERE'S A GOOD CHANCE YOUR HOLIDAY RETURNS WILL END UP IN A LANDFILL

Five billion pounds of returned items end up in the trash heap, according to Optoro, a tech company that helps major retailers manage their returns.

Not only are these returns environmentally unfriendly, but they are costing retailers a fortune.

Each year, consumers return about $380 billion worth of goods -- $90 billion of which are processed during the holiday, according to Oprtoro.

Only half of returns make it back onto shelves, the company estimates. The rest, due to circumstances such as damages or opened boxes, take a different path.

About a quarter of items are returned to the manufacturer. Others go to secondary retailers.

But many returns are sold for pennies on the dollar to liquidators and discounters before ending up at regional wholesalers, who send the goods to pawn shops, dollar stores or even out of the country.

Ultimately, it's a long and expensive process for retailers.

Once a product is returned, the retailer has to foot the cost for assessing the item and repackaging it.

A like-new item or piece of clothing might be able to be resold at full cost. But most returns are used or damaged. A recent retail survey found that less than half of all goods can be resold at full cost.

And if it's cheaper for the retailer to throw out returned goods rather try to resell them, they end up in the trash.

The returns process has become even more complicated as people continue to shop online.

The National Retail Federation estimates 15% to 30% of items bought online will be returned -- about $32 billion worth.

Many retailers that were focused on building out the right technology and logistics to handle online sales ignored some of the problems that were created by e-commerce growth, according to Tobin Moore, Co-founder and CEO of Optoro.

Retailers are also bleeding money as consumer habits and expectations change.

As people get more comfortable buying clothes online and returning the ones that don't fit, the volume of returns shoots up, creating additional transportation problems, according to Moore.

"It's good that consumers are taking more risks and buying goods, but it's not the easiest problem for retailers to solve," Moore says.

There's also a time crunch to get certain products resold. Returned electronics, for example, can lose much of their value over a six-month period.

And then there are the shipping costs.

Customers have come to expect free shipping for online purchases. And for now at least, many companies eat the cost of returns.

"They simply accept it as a price of doing business," says Jonathan Byrnes, a senior lecturer at MIT's Center for Transportation & Logistics.

Cheaper solutions may be staring retailers in the face.

Startup Happy Returns helps digitally native apparel retailers process their returns by providing customers physical locations where they can drop off items they want to send back.

The company's pitch: retailers can offer free returns without making people go through the "arts and crafts" of printing out a shipping label and mailing the return themselves. Happy Returns says retailers can save money using its service.

Kohl's is trying out a twist on the idea of using physical locations for returns. It lets Amazon customers return purchases at its stores -- and Kohl's gets a boost in foot traffic.

But retailers can take steps to avoid returns altogether.

Byrnes says many returns are the result of incorrect information listed online. Simply putting some attention into making sure items are being represented accurately helps cut down on returns.

"It's the number one problem for retailers," Byrnes says. "And it's virtually free to fix."

CNN Wire contributed to this report.

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