As holiday shopping hits record levels, retailers face a mounting challenge - an unprecedented surge in returns. According to a new National Retail Federation report, returned goods are expected to reach $890 billion in 2024, representing 17% of all merchandise sales. This marks a substantial increase from 2023's $743 billion in returns.
The rise of online shopping has dramatically changed consumer behavior. Nearly two-thirds of shoppers now practice "bracketing" - ordering multiple sizes or colors with the intention of returning some items. Even more concerning is the growing trend of "wardrobing," where 69% of consumers admit to buying items for single use before returning them, up 39% from last year.
These return habits come at a steep cost to retailers, with processing each return averaging 30% of the item's original price. Beyond financial implications, returns pose serious environmental challenges. In 2023 alone, returned goods generated 8.4 billion pounds of landfill waste.
Major retail chains are implementing various strategies to address this growing problem. Many have tightened their return policies by shortening return windows and introducing restocking fees. Some companies, including Amazon and Target, have adopted "keep it" policies, allowing customers to keep low-value items while still receiving refunds.
Innovative solutions are emerging through buyback and resale programs. Major brands like Patagonia, J.Crew, and Walmart have launched initiatives to keep returned goods in circulation through secondhand sales.
Despite these efforts, return policies remain a critical factor in shopping decisions. Research shows 76% of consumers consider free returns when choosing where to shop, and 67% say negative return experiences would deter them from future purchases with a retailer.
As return rates continue climbing, particularly during peak holiday seasons, retailers must balance customer satisfaction with sustainable business practices. The challenge lies in managing returns efficiently while maintaining profitability and reducing environmental impact.