Dubbed “Offset,” the solution lets brands offer their customers the chance to pay a small upfront fee during checkout in exchange for free returns later, the company said in a Wednesday (Sept. 25) press release.

“With the rising costs of returns and reverse logistics posing significant challenges for brands, global retailers like H&M, Zara, and ASOS have shifted away from free return policies,” Loop said in the release. “In fact, over 60% of merchants today charge a return fee in an effort to recover the costs of managing returns.”

Offset, the release adds, gives merchants a way to deliver profitability and customer satisfaction at scale, helping reduce friction and dissatisfaction by being transparent about return fees up front.

PYMNTS spoke last month with Loop CEO Hannah Bravo about the issue of returns fraud, which cost American merchants an estimated $101 billion in 2023.

“The tightening economy has led to consumers getting creative when it comes to returns fraud, and online shopping is just making it easier,” Bravo said. “Along with this, the intent to use items only temporarily and dissatisfaction with product quality are also driving factors in the rise of policy abuse.”

This behavior, Bravo added, “might be a reaction to overly lenient returns policies that were prevalent during the eCommerce boom and the pandemic, when companies prioritized shopper convenience over profitability.”

But in spite of its financial toll, Bravo said returns fraud offers a major opportunity for both brands and solution providers.

“Returns fraud and policy abuse have become difficult behaviors for retailers to prevent, turning into a major drag on many brands’ margins and contributing to major financial losses,” she told PYMNTS.

For companies like hers, this means taking the opportunity to deliver comprehensive fraud prevention solutions, Bravo said, underlining how Loop’s platform offers integrated tracking tools, advanced analytics and automation to help retailers address fraud more efficiently.

Meanwhile, PYMNTS spoke with Catherine Dummitt, vice president of marketing at Narvar, about the ways retailers are turning the pressure from the costs associated with returns into an opportunity for growth.

“Making returns as smooth and consumer-friendly as possible is crucial for retaining customer loyalty and fostering repeat purchases,” she said. “Implementing options like in-store returns, drop-off points, and box-free, label-free returns can significantly enhance the customer experience.”

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During Stitch Fix’s fourth-quarter and full-year fiscal year 2024 results announced Tuesday (Sept. 24), Baer said he was pleased with the company’s execution of its transformation, embedding retail best practices, increasing efficiency of operations, optimizing organizational structure, and expanding gross margins with no debt.

“We expect to continue to drive improvements and return to revenue growth by the end of FY 2026,” Baer said, adding the rationalization phase revealed a strengthening of the company’s foundation, which included exiting its U.K. business and closing two fulfillment centers, resulting in $100 million savings in FY 2024.

“We are squarely in the building phase now,” Baer said.

In Q4 2024, the company reported net revenue of $319.6 million, a decrease of 12.4% year over year. While the decline is significant, Baer noted the results met the high end of their guidance, indicating progress amid restructuring efforts. Full-year revenue reached $1.34 billion, down 16% from the previous year, with active clients dropping to 2.5 million.

Baer, who recently completed his first year as CEO at Stitch Fix after serving as Macy’s chief customer and digital officer and vice president of eCommerce at Walmart.com, emphasized the company is positioned for growth. He is optimistic about the reimagined client experience, underscoring investments in artificial intelligence (AI) and data science to enhance personalization and engagement.

This renewed focus on understanding customer preferences and behaviors is central to Stitch Fix’s plan to increase revenue and improve client retention.

“We know more about our clients on Day 1 than many retailers do over their entire relationship,” Baer said. “That’s a differentiator for us that’s tied to delivering a convenient and personalized experience.”

While Baer is optimistic about the company’s financial footing and strategies, he acknowledged why a transformation plan had to be devised, adding, “As the retail market and client experiences evolved, we didn’t adapt our service or assortment enough.”

In the call, Baer outlined the key changes the company made.

“First, we created a more engaging visual and interactive way for clients to demonstrate their styles and fit,” he said, noting personalized snapshots of client’s style profiles. “Our proprietary AI models enable us to present style files, and we’ve seen a 5% increase in conversions for clients who received a style file. We are launching style files to all existing clients. This will be a valuable tool.”

Second, Stitch Fix is increasing the visibility of its stylists by creating stylist profiles showing each one’s areas of expertise and related interests. Baer noted a 12% increase in conversions for clients who received stylist profiles.

Third, Baer said the company is increasing the flexibility of its model in response to client feedback. Instead of clients receiving five items to try, now they will each receive eight items.

“Revenue is up 50% with clients who have received eight items instead of five,” Baer explained. “We are now well positioned to bring considerable newness and adding thousands of new styles in Q1. So many clients are eager to spend more with us. That is a big part of our strategy going forward is to drive that revenue up per client.”

Baer added, “Transformation takes time. I’m confident in our strategy. I’m encouraged by the progress we’re making on our transformation strategy and energized by the bright future I see for this company.”

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“This” is retail’s ability to meet consumers where they are — whether online, in-store or on social media — and deliver a seamless, efficient and reliable shopping experience across all channels.

They might find a product on social, browse a marketplace, or even discover a product through search. Retailers need to be able to adapt to this multifaceted consumer journey and orchestrate their inventory accordingly. This requires a level of flexibility and agility that many legacy systems simply cannot offer.

“A term we’ve been bantering around a lot inside our company is the concept of ‘peak website,’” he added, explaining that it’s an idea that reflects how the traditional eCommerce model — where retailers drive traffic to their websites and convert sales directly — may no longer suffice. That’s because consumers are flexible in their shopping journeys, often starting online and ending in-store or purchasing directly through social media.

“Your consumer customer is going to show up where they want to show up,” Micucci said.

It’s not a new story, nor a new item on retail’s agenda. But it’s an outcome that’s complex to execute, Micucci said, despite the host of digital innovations, including advances like artificial intelligence (AI), that retailers have at their fingertips to help them.

Without systems that provide visibility and flexibility, retailers struggle to manage the complexity of omnichannel fulfillment. Historically, retailers would rely on outdated enterprise resource planning (ERP) systems and spreadsheets, creating an inefficient back-end process prone to errors, delays and poor customer experiences. For example, Micucci laid out a scenario where an order might be placed online but fulfilled by several different stores, leading to partial shipments or cancellations, which can damage customer trust and loyalty.

“I literally just finished a customer meeting between a spreadsheet and a 25-year-old ERP system that doesn’t have APIs,” Micucci said. “The ERP system was designed for financial controls, not for flexibility of delivering these experiences.”

Legacy Systems Hold Retailers Back

From 2010 to the onset of the pandemic, eCommerce and retail experienced steady, predictable growth, Micucci explained, with brick-and-mortar retail maintaining a growth rate of around 4% and eCommerce outpacing it at about 12%.

Then came COVID-19 that accelerated the adoption of eCommerce by a factor of 10, with consumers flocking to online shopping platforms. However, as the pandemic waned, retail found itself at an inflection point — and eCommerce in particular started to moderate as core retail rebounded.

“It’s not that consumers are not buying online anymore, but more and more transactions and spend is being swooped up under the guises of marketplaces, whether its Amazon, Walmart, or the direct-from-China model with Temu and TikTok,” Micucci said. “About 55% of the spend is captured right there.”

The reason? These digital platforms have back-end systems that enable them to meet shoppers’ expectations.

This shift places pressure on traditional retailers to rethink their digital strategies. The challenge, according to Micucci, lies in what happens after a consumer hits the “checkout” button. This is where the orchestration of inventory, order fulfillment and delivery becomes critical. He stressed that the real battleground for retailers is not necessarily in creating a beautiful, user-friendly website, but in ensuring that their back-end systems can meet consumer expectations for fast, reliable delivery.

The challenge, as Micucci outlined, is for retailers to meet consumers where they are and to deliver the right product at the right time with the right inventory — something referred to in the business as “clientelling.”

Back-End Shift to Business Agility

The solution, Micucci noted, lies in adopting cloud-native back-end systems that provide retailers with the visibility and control they need to manage complex order fulfillment processes seamlessly. These systems, he stressed, must not only handle the complexities of inventory management and order orchestration but also provide the agility required to respond to the next major disruption — whatever that may be.

Micucci highlighted that even now, buy online, pickup in-store (BOPIS) remains a challenge for many retailers. While this model holds tremendous potential to drive foot traffic and sales, the execution often falls short due to inflexible systems that struggle to manage inventory across channels.

Legacy systems are not equipped to handle such requirements, and retailers that fail to modernize risk falling behind, he said.  

Still, hope springs eternal — and it usually does so on the back of technological innovation, particularly for retailers crafting seamless customer experiences.

As an example, Webster shared an anecdote around her experience shopping at the Celine store in Paris, where she purchased an item in-store. Then, later and back in America, she put her name on the waitlist for a separate product from the luxury brand. Later that day, she received a text message from the same store associate who had waited on her in Paris letter her know that the item was in stock and in her size.

“A great omnichannel experience comes from using the same systems behind the scenes that are operating the digital site, as well as the retailer’s other pieces, to create a seamless customer journey,” Micucci said about the Celine experience. “Unifying that journey and orchestration behind the scenes, that’s the win.”

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Anthropologie is ringing in the holiday season extra early this year, with its Holiday House, showcasing products for the December festivities, having opened its doors Tuesday (Sept. 17).

“This holiday season, we are thrilled to expand our holiday house experience, presenting it on a larger scale than ever before,” Anthropologie Group CMO Elizabeth Preis said in a press release. “This year’s showhouse boasts more spaces, an expanded product range, and enhanced design elements.”

The “fully shoppable” pop-up, which will remain open through Sunday (Sept. 22), is done in partnership with creative director and interior designer Glen Proebstel. It features holiday furniture and decor from Anthropologie and from its fellow URBN-owned retailer Terrain, all bearing QR codes to purchase them online. In addition to extending holiday sales, the move also aims to drive loyalty program adoption, with appointments being exclusively open to AnthroPerks members.

The move comes as consumers, amid ongoing economic challenges, are being thoughtful about how they spend on gifts. Many are planning ahead in an effort to best manage their budgets. The “Consumers Cautiously Spend More Amid Lower Inflation” edition of the PYMNTS Intelligence “Consumer Inflation Sentiment” examined how financial pressures affected consumers’ gift shopping last holiday season. The report revealed that, among the 77% of consumers who spent money on gifts during the 2023 holiday season, 56% said they had already decided what to buy for most or all purchases before going shopping.

Anthropologie is not the only merchant looking to capture the holiday spending of pre-planners. Retail giants Amazon and Walmart are squaring off for gift shoppers’ early spending as well. In early October, the former has its “Prime Big Deal Days” two-day event offering early discounts on holiday products.

“We’re gearing up for another exciting holiday shopping season, filled with unbeatable deals on beloved brands, seasonal products, and popular gifts available exclusively for Prime members,” Jamil Ghani, Amazon’s vice president of Prime worldwide, commented. “Whether Prime members are hoping to cross items off their gift lists early, looking forward to hosting joyful gatherings, or scoring something special for themselves, Prime Big Deal Days is here for all their holiday needs and more.”

Not to be outdone, Walmart’s early holiday shopping sale, announced Thursday (Sept. 19), starts Oct. 8, the same day as Amazon’s. However, it runs several days longer, ending on the 13. The Holiday Deals event features discounts on popular gifts and seasonal decorations.

These sales events come as the merchants aim to capture consumers’ holiday splurges, with eCommerce spending for the season estimated to increase by 2.3% to 3.3%

While some may feel nostalgic for a slower, more traditional start to the season, the trend toward early shopping reflects the evolving landscape of consumer behavior, where financial pressures prompt more thoughtful spending. As the competition for holiday dollars heats up, it’s evident that the race to capture the spirit of giving starts long before the first snow falls.

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“We believe that we were hitting some diminishing return in our previous strategy, because we’ve been talking to the same people with very similar messages,” Peloton Chief Marketing Officer Lauren Weinberg told the Wall Street Journal (WSJ) in a report posted Friday (Sept. 20).

Weinberg, who was previously CMO of Intuit’s QuickBooks and at Square, joined Peloton in January, according to the report.

The new marketing campaign she is readying for Peloton will highlight all the services the company offers, for customers with a variety of fitness goals, and will target groups of consumers who haven’t been drawn to the brand in the past, such as millennial men, per the report.

In addition, TV commercials will be concentrated in the fall and winter, which retail’s busiest period; promotions and marketing will focus on the United States market; and promotions and sales will be limited to boost the average price paid for each hardware unit, according to the report.

Peloton Interim Co-CEO Karen Boone said in August that many people still think of the company as a “bike and/or cardio company” despite an earlier rebranding effort launched in May 2023.

“We have 16 modalities, but not everyone knows all the modalities we have,” Boone said Aug. 22 during the company’s quarterly earnings call. “We’re really excited about Tread and Running, but also the content, the experiences, and run clubs and social features that we’re thinking about. We’re really bullish on strength. There’s so much of a movement toward strength. I think people understand the science behind it and why it’s important. It’s the No. 2 modality for us, but I still think there’s a lot of people who come for the cardio and then understand the strength.”

In addition, the company ended the most recent quarter with 75,000 fewer paid connected fitness subscribers. It also reported a net reduction of 59,000 paid app subscribers, despite investing in new content and features aimed at enhancing the app’s strength offerings, personalization and social features.

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The board also said in a Thursday (Sept. 19) press release that current President and CEO John Donahoe will retire from those roles and from the Nike board of directors effective Oct. 13. To ensure a smooth transition, Donahoe will remain as an adviser to the company through Jan. 31.

Donahoe said in the release: “It became clear now was the time to make a leadership change, and Elliott is the right person. I look forward to seeing Nike and Elliott’s future successes.”

When Hill was with Nike before retiring, he held senior leadership positions across Europe and North America; helped grow the business to more than $39 billion; and, when serving as president for consumer and marketplace, led all commercial and marketing operations for Nike and Jordan Brand, according to the release.

“I am excited to welcome Elliott back to Nike,” Mark Parker, executive chairman of Nike, said in the release. “Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the board concluded it was clear Elliott’s global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes and employees, make him the right person to lead Nike’s next stage of growth.”

Hill said in the release that he looks forward to reconnecting with the employees and partners he worked with over the years, to building new relationships and to “delivering bold, innovative products, that set us apart in the marketplace and captivate consumers for years to come.”

Nike said in a June 27 earnings release that its revenues were down 2% during the quarter ended May 31.

During an earnings call held that day, Nike Executive Vice President and Chief Financial Officer Matthew Friend said the company expected to see lower Nike Digital growth due to lower traffic caused by fewer product launches, planned declines of certain classic footwear franchises as the company works to balance supply and demand and reduced promotional activity.

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Amazon, for its part, is adding more offerings that extend beyond its own marketplace. The eCommerce behemoth is expanding its existing Buy with Prime program, which enables Prime members to get benefits such as free shipping from select external merchants’ online shops. The company announced Wednesday (Sept. 18) that consumers can now pay with PayPal through the offering.

Amazon is also growing its social commerce presence through Buy with Prime. Wednesday’s product updates additionally included the option for merchants participating in the program to advertise its availability on TikTok and provide real-time delivery estimates in these ads.

“Buy with Prime and Amazon Multi-Channel Fulfillment continue to help sellers attract new shoppers with the convenient, fast and predictable experience they expect from Amazon,” Peter Larsen, vice president of Buy with Prime and Amazon Multi-Channel Fulfillment, said in a statement. “Both services have seen significant growth over the last year, and we’re delighted to add to the momentum.”

Amazon noted that Buy with Prime orders through merchant websites have risen 45% year over year, and more than 50% more Prime customers adopted the offering. There are more than 25% more merchants offering the service. Additionally, during Prime Day, the company saw a 300% rise in amount orders compared to the same period the previous month.

Meanwhile, Walmart is appealing to deal-seeking consumers in its efforts to sweeten the bargain for paid subscribers. The company announced Thursday (Sept. 19) that its early holiday shopping sales event will be open early to paid members of its Walmart+ program, giving them a head start on getting the best discounts.

The move comes as part of a push to give members more perks to drive continued enrollment and retention.

“We talk with our members all the time,” Seth Dallaire, Walmart U.S. executive vice president and chief revenue officer, told analysts during last week’s Goldman Sachs Communacopia and Technology Conference. “… We want to understand… what is it about the delivery benefit that we do well that you want more of? And they’re very vocal and give us great feedback about that. But then also, we asked them are there other benefits that we might be able to offer to you?”

Dallaire added that members are seeking more kinds of benefits such as streaming perks, which the retailer is offering through its Paramount+ partnership, and food offerings, which it is now making a foray into with its Burger King tie-up.

PYMNTS Intelligence found that Amazon Prime remains more popular than Walmart+, but the latter is gaining ground. This year’s installment of the PYMNTS Intelligence Amazon Prime Day study drew from a July survey of nearly 6,000 United States consumers to understand their subscription and spending habits with the two retail giants. The results revealed that more than two-thirds of consumers are members of Prime, up from 65% last year. Meanwhile, 30% participate in Walmart+, up from 23% last year.

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“This year, nearly 50% of consumers will start their holiday shopping as early as August and September, as people remain price-conscious and plan ahead to maximize their holiday budgets,” the retail giant said in a Thursday (Sept. 19) news release.

“To meet customers where and how they’re shopping, Walmart will offer customers a holiday head start with savings starting in October, including its first Holiday Deals event of the season and the return of its inflation-free holiday meal — weeks earlier than previous years,” per the release.

That event begins Oct. 8, the same day Walmart rival Amazon kicks off its two-day, holiday-focused Prime Big Deal Days.

Likewise, Walmart’s event will get underway with a focus on its subscription holders, giving Walmart+ members a 12-hour head start on deals on the company’s app and website, starting at 12 a.m. Oct. 8.

All customers can find deals on the website and app beginning at noon that day, with in-store sales slated to begin the following day.

As reported here earlier this month, the 2024 holiday shopping season is expected to be slower compared to the prior year, though strong eCommerce sales are expected. A projection from consulting firm Deloitte finds that eCommerce sales will climb between 7% and 9% this season, to the tune of $289 billion and $294 billion.

“Our forecast indicates that eCommerce sales will remain strong as consumers continue to take advantage of online deals to maximize their spending,” said Michael Jeschke, principal at Deloitte Consulting, and the firm’s retail and consumer products lead.

And consumers are likely to seek out deals this fall, PYMNTS wrote recently, especially the 60% who live paycheck to paycheck. Research by PYMNTS Intelligence finds that the vast majority of these consumers have not seen their income increase to offset inflation.

“As such, these shoppers are making more conservative budgeting decisions,” PYMNTS wrote recently. “Ninety-two percent of paycheck-to-paycheck consumers in the former category and 97% of those in the latter said they have taken actions to cope with price increases when buying retail products. Plus, 94% and 96%, respectively, have done so for grocery products.”

The research also found that 42% of consumers have taken on the “budget shopper” persona when buying retail products as a way to cope with inflation.

These shoppers “trade down by turning to cheaper merchants and plan their purchases around sales and discounts,” the report said.

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Dollar Tree and Dollar General aim to open more than 1,300 new stores during this fiscal year, The Wall Street Journal reported Wednesday (Sept. 18).

While that figure is down from last year — and comes as Dollar Tree is closing many of its Family Dollar locations — it’s ahead of other retailers’ expansion plans, illustrating the chain’s belief that new stores can help boost sales and market share, according to the report.

Dollar stores are wrestling with a decline in spending, increased competition from other discounters, and a “strategic disadvantage when it comes to eCommerce,” with companies like Target and Walmart investing in omnichannel shopping integrations, the report said.

“Dollars always had this large niche in retail because it was the combination of value and convenience,” said Peter Keith, a senior analyst for Piper Sandler, per the report.

Now, Keith added, especially for middle- and upper-income consumers, “the shift toward this digital shopping has become the new convenience play.”

Dollar General management said last month that the company is employing a mix of digital tools and in-store experiences to boost sales.

“We have increased the employee presence at the front end of our stores, with our associates committed to providing [a] friendly, welcome and elevated level of engagement to our customers while also facilitating the positive checkout experience,” CEO Todd Vasos said during an earnings call.

Dollar Tree, meanwhile, announced this month its new multi-price format, designed to diversify the product range with items priced between $1.50 and $7. The goal is not to raise prices on existing products but to introduce new items at higher prices to improve the shopping experience and attract more customers.

This week saw the release of the latest retail sales figures from the U.S. Census Bureau, which showed that while consumers were still spending in August, the pace slowed. Overall retail sales were up 0.1% month over month, with non-store retail sales — typically seen as a proxy for eCommerce — climbing 1.4%.

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CEO Todd Vasos acknowledged that the company’s performance fell short of expectations, attributing it to rising prices and tightened consumer budgets, which have altered spending behaviors.

Despite a slight uptick in store traffic, the company has experienced a decline in average spending, highlighting the strain both on the retailer and its cost-conscious shoppers.

Vasos noted same-store sales growth of just 0.5% fell short of expectations. While customer traffic rose by 1%, the average transaction amount declined by 0.5%, driven by lower prices per item. This shift illustrates a trend where Dollar General’s customers, largely from lower-income households, are pinching pennies.

“This pattern suggests that our customers are less able to stretch their budgets through the end of the month,” Vasos explained during the company’s second-quarter earnings call. “With that in mind, as well as our continued softness in discretionary sales in our own customer data and survey work, we believe the softer-than-anticipated sales performance in Q2 is at least partially attributable to a core customer that is less confident of their financial position.”

Economy’s Impact

Vasos noted Dollar General’s customer base, primarily households earning less than $35,000 annually, has been hit hard by rising costs. Inflation has stretched their budgets, forcing many to forgo basic necessities and rely more heavily on credit cards for essential purchases.

“As a result, our core customer, who contributes approximately 60% of our overall sales, comes predominantly from households earning less than $35,000 annually,” Vasos explained. “Inflation has continued to negatively impact these households, with more than 60% claiming they have had to sacrifice on purchasing basic necessities due to the higher cost of those items, in addition to paying more for expenses such as rent, utilities and healthcare.

“More of our customers report that they are now resorting to using credit cards for basic household needs, and approximately 30% have at least one credit card that has reached its limit. And in our latest survey, 25% of our customers surveyed noted they anticipated missing a bill payment in the next six months.”

According to the PYMNTS Intelligence report, “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck,” 82% of the roughly 4,000 respondents rated inflation No. 1 among their economic concerns. As of January, 62% of consumers lived paycheck to paycheck, including 36% of those annually earning more than $200,000.

Consumers are blasting through their savings also. According to PYMNTS Intelligence in “New Reality Check: The Paycheck-to-Paycheck Report” titled, “Savings Deep Dive Edition,” on average, consumers exhaust 67% of their available savings every four years. For those living paycheck to paycheck, this depletion occurs more frequently, about every 2.5 years.

“As customers have felt more pressure on their spending, we have also seen corresponding elevation in the promotional environment beyond what we had anticipated coming into the year,” Vasos said.

“Importantly, we continue to feel very good about our everyday low-price position relative to competitors and other classes of trade. However, the increased promotional activity has pressured both sales and gross margin, and we anticipate this will likely continue for the duration of the year.”

Pivoting to Woo Shoppers

In response to these challenges, Dollar General is implementing a back-to-basics strategy focused on core operational improvements. The company has ramped up efforts to enhance the in-store experience, including increasing employee presence and focusing on inventory management. These initiatives aim to improve customer satisfaction and boost sales.

The company’s commitment to refining its supply chain and merchandising processes appears to be paying off. Dollar General has reported improvements in inventory levels and lower turnover rates among its staff, which has improved operational efficiency and customer engagement. The enhanced shopping environment and better in-stock levels are designed to resonate with the core customer base, providing the value and convenience they seek.

“Our efforts in the stores have centered around further enhancing the customer experience to deliver the value and convenience they expect in a clean and friendly shopping environment,” Vasos said.

“We have increased the employee presence at the front end of our stores, with our associates committed to providing friendly, welcome and elevated level of engagement to our customers while also facilitating the positive checkout experience. We have also focused labor hours on perpetual inventory management in our stores in an effort to significantly improve our in-stock levels and support our sales growth.”

As part of its promotional efforts, Dollar General has focused on leveraging digital tools to attract and retain customers. This strategy has already begun to show results.

“Just like we anticipated, we’re seeing the response from the consumer,” Vasos said. “It was almost immediate. She continues to engage, especially with those digital tools. We talk to her each and every quarter, and that’s exactly what we’re offering her right now, and we’ll continue to do so. We believe that those promotional cadences will continue to garner more and more customers and more and more transactions as we move through this quarter and into next.”

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