Holiday shopping is expected to reach record levels this year, with returns amounting to 17% of all merchandise sales, totaling $890 billion. This is up from 15% in 2023. Returns are more prevalent during the holiday season, with a 17% higher return rate expected. Customers ordering products they never intend to keep has become more common, with bracketing and wardrobing on the rise.
Processing a return costs retailers an average of 30% of an item’s original price, putting strain on traditional systems. Issues also arise with returned items not ending up back on shelves and causing environmental impacts. Only 54% of packaging was recycled in 2018, and returns in 2023 created 8.4 billion pounds of landfill waste.
To combat this, retailers are rolling out stricter return policies and working on improving the returns experience. Some are allowing customers to “keep it” and offering refunds without requiring returns. Others have buyback programs to keep goods in circulation.
Return policies and expectations are important predictors of consumer behavior, particularly for younger generations. Free returns are key for 76% of shoppers, and a negative return experience can discourage them from shopping with a retailer again.
Overall, the increase in returns presents challenges for retailers in terms of revenue loss and environmental impact, but many are implementing strategies to keep returns in check and improve the overall return experience for customers.
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