Holiday shopping is expected to reach record highs this season, but a growing number of those purchases will be sent back, piling on to an already multibillion dollar problem for retailers. According to the National Retail Federation and return management company Happy Returns, returns in 2024 are projected to be 17% of all merchandise sales in the United States, totaling $890 billion.
The projected total is up from a return rate of about 15%, or $743 billion, in 2023.
As shopping peaks in the weeks ahead, stores expect the holiday return rate to be 17% higher than the annual rate.
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Impact of online shopping
Retail experts said customers are now more comfortable with buying and returning habits due to the online shopping boom sparked by the pandemic.
Some of these habits include “bracketing,” which is buying multiple sizes or colors of the same clothing items with the intent to return some of those pieces.
In addition, 69% of shoppers admit to doing what’s known as “wardrobing.” That’s when a customer buys an item for a specific event and returns it afterward.
According to returns software company Optoro, wardrobing is up 39% from 2023.
According to data, 46% of shoppers say they return stuff multiple times a month, which is a 29% jump from last year.
Retail industry challenges
The current rate of returns creates major challenges for companies when it comes to lost revenue, environmental impact and managing all the returns.
In 2023, several retailers rolled out stricter return policies like shortening the return window and charging a return or restocking fee.
Some places, including Target, implemented a “keep it” policy in certain cases. That’s when the company offers a refund without taking the product back.
Other brands like J. Crew and Levis Strauss & Co. are trying buy back programs to keep goods in circulation.
Looking ahead
Improving the returns experience tops the list of retailers’ goals going into next year. While returns can cost the company, the vast majority of shoppers are more likely to buy from a place that offers easy returns.
