Returns Expected to Hit $890 Billion in 2024: A Growing Challenge for Retailers
Holiday shopping is expected to reach record levels this year. But a growing share of those purchases will be sent back.
A survey by the National Retail Federation (NRF) and Happy Returns shows that returns are causing a $890 billion issue for stores when holiday shopping hits record levels in 2024. Up from $743 billion (15%), the research projects 17% of all goods sold this year will be returned.
The Rising of Returns
During the holiday season, returns are very strong; rates should surpass the yearly average by 17%. Online buying and shifting consumer behavior including:
Driving the increase are "bracketing" (ordering many sizes or colors to return the undesired products) and "wardrobing," (buying items for one-time use before returning them).
According to Optoro, 69% of clients acknowledged to wardrobing, a 39% rise from 2023, and over half of them are returning several times a month.
Processing returns costs stores an average of 30% of the original price both financially and environmentally. Many returned goods wind up in landfills or are transported overseas for repackaging rather than making it back on shelves. Returns for 2023 alone produced 8.4 billion pounds of landfill garbage.
Additionally greatly affecting the environment are returns, which support carbon emissions and waste of resources. The sustainability issue is entwined with the financial load, according to Pollen Returns CEO Spencer Kieboom.
Retailers Change to Reducing Losses
Retailers are tightening regulations; 81% are cutting return windows or adding restocking fees in 2023. Innovations to lower return rates and control inventories consist in:
Refund-and-keep policies: Companies like Target and Amazon grant refunds without calling for returns of specific products.
Ikea, Patagonia, and Levi Strauss all started buyback projects to re-sell unwanted goods.
Retailers auction returns to companies like Plato's Closet or Play It Again Sports.
David Sobie of Happy Returns says that reconciling customer happiness with financial and environmental goals depends on bettering the returns experience by means of sustainable solutions.
Consumer Attitudes and Future Developments
Younger consumers—especially Gen Z and millennials—especially rely much on return policies on buying decisions. For 76% of consumers, free returns are still vital; two-thirds of them say a bad return experience will deter repeat business.
Retailers who minimize their environmental impact and streamline returns will probably have a competitive edge in a market going more and more environmentally sensitive.
