Refunds to Revenue: AI and loyalty perks help retailers in post-holiday hangover
Australian retailers are turning to artificial intelligence to simplify and automate returns and exchanges, while strengthening loyalty programs and redemptions to maintain cashflow as consumers grapple with the post-holiday debt hangover.
With household budgets tight and consumer confidence fluctuating, retailers are under pressure to protect margins without alienating cautious shoppers. AI-driven technology for returns is emerging as a key part of that strategy.
Maurice Zicman, Vice President, CX Strategy at TP in Australia says major brands are using AI algorithms to fast-track refunds, exchanges and store credits by automating eligibility checks and decision-making.
He says it makes the process faster for customers, while reducing labour costs and speeds up inventory recovery for retailers.
“Traditionally, returns have been one of retail’s most expensive and labour-intensive pain points. Items must be inspected, refunds approved and inventory updated, with customers left waiting for this process to conclude before a refund is issued.
“Some retailers are now using AI models to instantly assess whether a return qualifies for immediate approval with many customers receiving a refund before the item is even shipped back through “refund without return.”
“AI tools can also assess photos of returns for any damage and inspect the packaging to help determine whether products can be resold at full price, discounted or redirected to secondary markets.
“Retailers are also tightly integrating AI-powered returns with loyalty programs. Instead of issuing cash refunds, customers are increasingly offered instant store credit or personalised exchange options which are designed to keep spending within the brand.
Latest data shows Aussies spent an average of $828 on gifts, holidays and celebrations with fewer than a third managing to stick to a budget and 32% using a credit card. “The rising cost of living has left many households cautious about discretionary spending particularly in January and February, posing challenges for retailers looking to maintain sales momentum,”
“Post-Christmas is not just about clearing stock but also leveraging insights from the holiday season to fine tune customer experiences and loyalty programs,” adds Mr Zicman.
Retailers are using a number of strategies to maintain momentum such as:
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Easier Returns: Shoppers have grown accustomed to one-click buying and next-day delivery and their expectations for returns have risen just as fast. Retailers are increasingly turning to artificial intelligence to streamline the returns process, cutting wait times for customers while reducing costs and fraud for businesses.
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Data-driven personalisation: Retailers are leveraging data from holiday purchases to tailor marketing campaigns, with a focus on personalised offers and tailored discounts.
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Omnichannel integration: Businesses are doubling down on their digital presence, ensuring seamless online, in-store and social media shopping experiences to capture a broader audience.
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Customer care support: There’s a growing trend among retailers investing in scalable customer service solutions to handle post-Christmas inquiries. This ensures they can meet demand spikes and deal with returns and warranty issues without compromising service quality.
“Retailers are navigating a complex landscape and they must be agile and proactive. The post-holiday period is a time to recalibrate, innovate and strengthen customer relationships to drive sustainable growth.
“As Australian businesses navigate economic uncertainties moving into 2026, their ability to embrace new and emerging AI technologies to adapt to consumer behaviour and market trends will determine their resilience in the months ahead,” says Mr Zicman.
