H&M could start charging customers for returns

New York
CNN Company

So much for impulse buying at H&M.

Next time you shop there, specifically online, then sign upret that bag cropped tops or cheap ripped jeans, you may have to pay for a return.

The Swedish fast fashion retailer said it is preparing to test merchandise return rates in some markets.

“Everything depends on how the customer receives it. So we’re doing a test to see if that’s something to fast-track,” H&M CEO Helena Helmersson said in a recent call to analysts on Thursday.

“If we’re going to expand, it’s going to take some time,” he said. “We don’t have a specific time limit. But, again, let’s see when we see the evaluation of the tests, that is the most effective or not.’

In an emailed comment to CNN Business, the company said H&M will test the return fee in some of its markets, “but it will only apply to online returns. If a customer returns a product purchased online in-store, there is no fee.”

H&M, one of the biggest sellers of affordable fashion, said a number of challenges – such as higher raw material and energy costs, a stronger dollar, an exit from the Russian market due to the Ukraine conflict and a slowdown in consumer spending – were weighing on its business. strives to implement cost-saving measures, such as setting reimbursement rates.

Among other ways to cut costs, H&M said, is “how we buy services and how we set up our business in the office and on the road.” Prices have also risen, “but obviously not to fully offset the severe headwinds in supply,” H&M head of investor relations Nils Vinge said on the call.

There could also be another reason to hit customers with return rates.

Retailers are now stuck with too much inventory as households squeeze their discretionary budgets.

They are desperate to get rid of clothes, shoes and toys, gadgets and furniture because they are losing tons of money on unsold products.

Product returns only add to this excess.

Industry experts said retailers are looking at two options for dealing with returns: charging fees for returns or letting customers keep items.

These tactics are smart and strategic, said Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group. “Retailers are stuck with unprecedented levels of excess inventory. They can’t recover even more.”