H&M could start charging customers for making returns

By Parija Kavilanz, CNN Business

So much for impulse buying at H&M.

The next time you shop there, specifically online, and then regret bagging that crop top or cheap ripped flared jeans, you might have to pay to return it.

The Swedish fast-fashion seller said it is gearing up to test return fees on merchandise in some markets.

“It all depends on how it’s received by the customer. So that’s why we do a test to see if that is something to fast track,” Helena Helmersson, H&M’s CEO said during its latest earnings call with analysts Thursday.

“If we’re about to roll it out, it will take some time,” she said. “We don’t have an exact time limit on it. But again, let’s see when we see the evaluation of the tests, whether this is the most impactful thing to do or not.”

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

H&M, one of biggest sellers of affordable fashion, said a multitude of challenges — such as higher raw material and energy costs, a stronger dollar, exiting the Russian market amid the Ukraine conflict and a pullback in consumer spending — are weighing on its business as it strives to implement cost-saving measures, like setting return fees.

Among other ways to trim costs, H&M said it is also evaluating “how we purchase services to how we set up our business when it comes to offices and travel.” Prices have also gone up, “but obviously not fully to compensate for the severe headwinds in sourcing,” Nils Vinge, head of H&M investor relations, said during the call.

There could also be another reason for hitting customers with return fees.

Retailers are stuck with too much inventory now that households tightening up their discretionary budgets.

They’re desperate to get rid of stuff ranging from clothes, shoes and toys to gadgets and furniture because they are losing gobs of money on unsold products.

Product returns only add to this glut.

Industry experts say retailers are mulling two options to address returns — dissuading them from making returns by charging them fees or just letting customers keep the stuff.

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

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