What: Salesforce reports a record level of returns for Christmas 2022, which however did not change the overall yearly balance compared to 2021.

Why it is important: Promotions were heavily used to offload inventories during the pre-holiday and holiday periods. However, this could come back as a boomerang and aggravate inventory issues during Q1 2023.

In Salesforce’s 2022 holiday spending report, returns are mentioned to have reached a total of $1,39bn, 13% of total holiday spending, growing +63% yoy. Returns in the US are now estimated to grow faster than revenue for 91% of retailers. For those that reported improving inventory situations heading into 2023, record return levels could be a troubling sign, as many retailers could be stuck with bloated inventories in Q1 after the current wave of returns subsides.

This record level of returns was in the context of total consumer spend of over $1.14tn globally across the 2022 holiday season, which was roughly flat with 2021’s numbers. In the US, spending on online holiday orders exceeded $270bn, representing a +5.1% y/y increase over 2022. Along with stronger than anticipated demand amid a deteriorating macroeconomic backdrop, Salesforce noted that “steeper discounts on peak days” and a surge in Buy Online and Pickup In Store (BOPIS) adoption contributed to “stronger online sales growth than expected.” This was based on data from more than 1.5bn shoppers on retail sites that use Salesforce’s Customer 360.

US retailers experienced “staggering” levels of returns after Christmas