Holiday shopping in 2024 is expected to reach record levels, with a significant portion of purchases being returned. According to a report by the National Retail Federation and Happy Returns, returns are expected to amount to 17% of all merchandise sales, totaling $890 billion in returned goods. This is an increase from the 15% return rate in 2023. Returns are particularly prevalent during the holiday season, with retailers expecting a 17% higher return rate for the holidays compared to the annual rate.
The rise in returns can be attributed to the growing trend of online shopping, which has made customers more comfortable with buying and returning items. Practices such as bracketing, where consumers buy multiple sizes or colors and return the ones they don't want, as well as wardrobing, where items are purchased for specific events and then returned, have contributed to the increase in returns.
Processing returns can be costly for retailers, with the average cost being 30% of an item's original price. Additionally, returned goods often do not end up back on the shelf, leading to sustainability issues for retailers. Despite the challenges posed by returns, companies are implementing strategies to manage them, such as rolling out stricter return policies and offering "keep it" options where customers can keep the product and still receive a refund.
Return policies and expectations are becoming increasingly important for consumers, particularly for younger generations like Generation Z and millennials. 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. As return policies continue to shape consumer behavior, retailers are working to improve the returns experience and meet the expectations of their customers.