Retail sales in November increased 0.1 percent seasonally adjusted over October and were up 2.1 percent unadjusted year-over-year, marking the first half of the holiday season with billions of dollars in shopping left to be done, the National Retail Federation said. The numbers exclude automobile dealers, gasoline stations and restaurants.

“November showed modest growth on the surface, but you have to remember that the late timing of Thanksgiving delayed the beginning of the busiest portion of the holiday season and pushed Cyber Monday’s billions of dollars of retail sales into December,” NRF Chief Economist Jack Kleinhenz said. “These numbers are more about the calendar than consumer confidence. Consumer spending has been solid, and there’s still a lot of spending to be done. With strong employment and higher wages, we’re on track for a strong holiday season.”

Kleinhenz noted that the year-over-year comparison was challenging because November 2018 was up an unusually strong 4.7 percent over the year before. But December 2018 was down 0.2 percent from the year before, making it likely that next month could show a strong comparison.

In addition, many consumers began their shopping early this year, with some starting before November. NRF surveys showed that 39 percent planned to begin by Halloween, and that consumers on average had completed 52 percent of their shopping as of the Thanksgiving Day weekend.

NRF’s forecast predicts that holiday retail sales during November and December will increase between 3.8 percent and 4.2 percent for a total of between $727.9 billion and $730.7 billion.

Separately, a new report from CBRE projects retailers and shippers this holiday season will handle more returns than ever of goods bought online, illustrating a costly drawback to e-commerce’s growth that the industry is working hard to contain.

CBRE calculates a maximum value for this season’s returns of online purchases at $41.6 billion by applying the standard percentage range for online returns – 15 percent to 30 percent – to this year’s projected holiday retail sales. Digital Commerce 360, the data and analysis provider formerly known as Internet Retailer, forecasts that online sales in November and December will total $138.5 billion.

In contrast, the average return rate for merchandise bought in stores is roughly 8 percent. E-commerce, however, established an early and enduring practice by many companies of waiving shipping costs on returned merchandise, which consumers now widely expect and use.

For its latest annual report on online returns, CBRE again teamed with Optoro, a technology company that powers returns optimization for retailers and brands, to generate additional insights on the cost of online returns and value of potential solutions. Optoro estimates that the retail industry’s inefficiencies with handling returned merchandise result in $50 billion of lost profit margin each year and more than 10 billion instances of needless shipments and merchandise touches in warehouses.

The process of receiving, processing and reassigning returned goods within a supply chain is commonly called reverse logistics.

“Returned merchandise has a massive impact on retailers’ bottom lines, so the industry is keenly focused on developing new ways to reduce returns and better process those that do come in,” said John Morris, CBRE Executive Managing Director and Americas Industrial & Logistics Leader. “Much of that involves improvements at the point of sale. But a big part of it also entails efficiently processing returned merchandise, sometimes by establishing distribution capacity and procedures strictly for handling returns, and sometimes by outsourcing the process to third-party-logistics companies.”

Among other insights from CBRE and Optoro:

• Various merchandise categories depreciate at different rates when returned to a retailer. For example, fashion apparel can lose 20 percent to 50 percent of its value over eight to 16 weeks, according to Optoro. Electronics lose 4 percent to 8 percent of their value each month.
• Distribution facilities handling returns – reverse logistics – need 15 percent to 20 percent more space than a traditional facility for outbound distribution because the volume, dimensions and final destination of returned goods are inconsistent and varied.
• Options for reassigning returns include restocking the merchandise in the store; selling it to discounters and resellers; donating it to charities; or destroying it. Returns generate 5 billion pounds of waste in U.S. landfills annually, per Optoro.

“Many retailers and brands understand the impact that returns have on their bottom line and are looking for systems and technology to streamline and optimize the returns process,” said Joe Hsu, Senior Director of Solutions at Optoro. “The good news is that despite the influx of returns this holiday season, the returns moment can have a significant impact on customer loyalty. According to our research, 97 percent of customers are more likely to shop again at a retailer where they had a positive returns experience.”