Holiday shopping is projected to increase this year, but a significant portion of those purchases are expected to be returned. Returns in 2024 are anticipated to account for 17% of all merchandise sales, totaling $890 billion, which is up from 15% of total U.S. retail sales in 2023. The holiday season sees a higher rate of returns, with retailers expecting a 17% higher return rate compared to the annual rate.
Online shopping has led to an increase in returns, with customers becoming more comfortable buying multiple sizes or colors and returning items they don’t intend to keep. Practices such as “bracketing” and “wardrobing” have become more common, leading to an increase in return rates. Processing returns costs retailers an average of 30% of an item’s original price, placing a strain on their bottom line.
Managing returns also poses environmental challenges, as returned goods often end up in landfills or require additional resources to be repackaged and restocked. To address these issues, retailers are implementing stricter return policies, including restocking fees and shorter return windows. Some companies are also offering buyback programs or selling returned items as secondhand goods.
Return policies are becoming increasingly influential in consumer behavior, especially for younger generations. Free returns are a key factor for 76% of shoppers when deciding where to spend their money, and a negative return experience can deter them from shopping with a retailer again. Overall, retailers are working to improve the returns experience while also considering the environmental impact of managing returned goods.
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