Kohl's found a brilliant way to profit from a huge waste

Kohl'sAPBella Thorne shops Candie’s brand at Kohl’s in Los Angeles.

Returned merchandise costs retailers billions of dollars every year.

Now, department store Kohl’s has a plan to make money from the merchandise by opening an off-price store stocked entirely with returns, Racked reports, citing Chain Store Age.

The New Jersey store will open in June and be “stocked with deeply discounted, like-new merchandise that had previously been returned to Kohl’s stores and Kohls.com.”

Returns are typically a huge cash drain for retailers.

Victoria’s Secret has to shred all returned merchandise, according to workers.

Back in 2011, a customer saw the shredding first-hand. Victoria’s Secret workers are apparently not supposed to do it in front of their customers.

“We’re sure a small part of it may be that some store simply don’t believe you didn’t wear that dress that smelled more like your perfume than the store when you returned it, but an even larger part of it is brand protection,” wrote Styleite’s Justin Fenner.

It’s not just Victoria’s Secret though. Don’t assume that a product just goes back on the shelf after you return it — at any retailer.

“By the time it’s been sent back to distribution, repackaged, if it’s in a condition for sale, it could have been discontinued or discounted,” Clear Returns CEO Vicky Brock told Bloomberg Businessweek. “In some cases, it will just get shredded.”

The Kohl’s department store is a great idea because consumers know what they’re in for and won’t be disappointed purchasing returned merchandise.

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