Retail returns: An $890 billion problem

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

Retail returns: An $890 billion problem

A driver for an independent contractor to FedEx delivers packages on Cyber Monday in New York, US, on Monday, Nov. 27, 2023.

Stephanie Keith | Bloomberg | Getty Images

Holiday shopping is expected to reach record levels this year. But a growing share of those purchases will be sent back.

Returns in 2024 are expected to amount to 17% of all merchandise sales, totaling $890 billion in returned goods, according to a new 

This is the hidden content, please

• Sign In
• or
• Sign Up

 by the National Retail Federation and return management company Happy Returns. That’s up from a return rate of about 15% of total U.S. retail sales, or 

This is the hidden content, please

• Sign In
• or
• Sign Up

, in 2023.

Even though returns happen throughout the year, they are much more prevalent during the holiday season, the NRF also found. As shopping reaches a peak in the weeks ahead, retailers expect their return rate for the holidays to be 17% higher, on average, than the annual rate.

“Ideally, I hope there is a world in which you can reduce the percent of returns,” said Amena Ali, CEO of returns solution company Optoro, but “the problem is not going to abate any time soon.”

More from Personal Finance:
Here are the last days to ship a holiday package
The best ways to save money this holiday season
Holiday shoppers plan to spend more

Why returns are a big problem

With the explosion of online shopping during and since the

This is the hidden content, please

• Sign In
• or
• Sign Up

Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send back, a practice known as “

This is the hidden content, please

• Sign In
• or
• Sign Up

,” according to Happy Returns.

Even more — 69% — of shoppers admit to “wardrobing,” or buying an item for a specific event and returning it afterward, a separate report by Optoro found. That’s a 39% increase from 2023.

Largely because of these types of behaviors, 46% of consumers said they are returning goods multiple times a month — a 29% jump from last year, according to Optoro.

All of that back-and-forth comes at a hefty price.

“With behaviors like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics,” David Sobie, Happy Returns’ co-founder and CEO, said in a statement.

What happens to your returns

Processing a return costs retailers an average of 30% of an item’s original price, 

This is the hidden content, please

• Sign In
• or
• Sign Up

found. But returns aren’t just a problem for retailers’ bottom line.

Often returns do not end up back on the shelf, and that also causes issues for retailers struggling to enhance sustainability, according to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company. 

Sending products back to be repackaged, restocked and resold — sometimes overseas — generates even more 

This is the hidden content, please

• Sign In
• or
• Sign Up

, assuming they can be put back in circulation.

In some cases, returned goods are sent straight to landfills, and only 

This is the hidden content, please

• Sign In
• or
• Sign Up

in 2018, the most recent data available, according to the U.S. Environmental Protection Agency.

Returns in 2023 created 

This is the hidden content, please

• Sign In
• or
• Sign Up

, according to Optoro.

That presents a major challenge for retailers, not only in terms of the lost revenue, but also in terms of the environmental impact of managing those returns, said Rachel Delacour, co-founder and CEO of Sweep, a sustainability data management firm. “At the end of the day, being sustainable is a business strategy.”

To that end, companies are doing what they can to keep returns in check.

In 2023, 

This is the hidden content, please

• Sign In
• or
• Sign Up

 rolled out stricter return policies, including shortening the return window and charging a return or restocking fee, according to another report from Happy Returns.

While restocking fees and shipping charges may help curb the amount of inventory that is sent back, retailers also said that improving the returns experience was a key goal for 2025.

Now

This is the hidden content, please

• Sign In
• or
• Sign Up

, including 

This is the hidden content, please

• Sign In
• or
• Sign Up

 and Target, are allowing their customers to simply “keep it,” offering a refund without taking the product back.

How return policies shape shopping habits

Increasingly, return policies and expectations are an important predictor of consumer behavior, according to Happy Returns’ Sobie, particularly for Generation Z and 

This is the hidden content, please

• Sign In
• or
• Sign Up

“Return policies are no longer just a post-purchase consideration — they’re shaping how younger generations shop from the start,” Sobie said.

Three-quarters, or 76%, of shoppers consider free returns a key factor in deciding where to spend their money, and 67% say a negative return experience would discourage them from shopping with a retailer again, the NRF found.

A survey of 1,500 adults by

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

found that 77% of shoppers check the return policy before making a purchase.

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

#Retail #returns #billion #problem

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up