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.
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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.
Tags: christmas, Holiday shopping, National Retail Federation, Retail Sales, retailers, shopping, Target
[Simone]
HOLIDAY SHOPPING IS EXPECTED TO REACH RECORD HIGHS THIS SEASON, BUT A GROWING NUMBER OF THOSE PURCHASES WILL BE SENT BACK. THAT PILES ON TO AN ALREADY MULTI-BILLION DOLLAR PROBLEM FOR RETAILERS.
ACCORDING TO THE NATIONAL RETAIL FEDERATION AND RETURN MANAGEMENT COMPANY “HAPPY RETURNS” … RETURNS IN 20-24 ARE PROJECTED TO BE 17 PERCENT OF ALL MERCHANDISE SALES IN THE U-S … TOTALING 890 *BILLION* DOLLARS.
THAT’S UP FROM A RETURN RATE OF ABOUT 15 PERCENT OR 743 *BILLION* DOLLARS … IN 20-23.
AND AS SHOPPING PEAKS IN THE WEEKS AHEAD … STORES EXPECT THE HOLIDAY RETURN RATE TO BE 17 PERCENT HIGHER THAN THE ANNUAL RATE.
RETURN RATES CAN BE EVEN HIGHER FOR ONLINE STORES.
RETAIL EXPERTS SAY BECAUSE OF THE ONLINE SHOPPING BOOM SPARKED BY THE PANDEMIC … CUSTOMERS ARE NOW MORE COMFORTABLE WITH BUYING AND RETURNING HABITS … INCLUDING SO-CALLED “BRACKETING” … BUYING MULTIPLE SIZES OR COLORS OF THE SAME CLOTHING ITEMS WITH THE INTENT TO RETURN SOME OF THOSE PIECES.
69 PERCENT OF SHOPPERS ADMIT TO DOING WHAT’S KNOWN AS “WARDROBING” … WHEN YOU BUY AN ITEM FOR A SPECIFIC EVENT AND RETURN IT AFTERWARD. THAT’S ACCORDING TO RETURNS SOFTWARE COMPANY “OPTORO,” AND UP 39 PERCENT FROM LAST YEAR.
46 PERCENT OF SHOPPERS SAY THEY RETURN STUFF MULTIPLE TIMES A MONTH – A 29 PERCENT JUMP FROM LAST YEAR.
AS YOU CAN IMAGINE, THIS CREATES MAJOR CHALLENGES FOR COMPANIES WHEN IT COMES TO LOST REVENUE, ENVIRONMENTAL IMPACT AND JUST MANAGING ALL OF 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 THEY OFFER A REFUND WITHOUT TAKING THE PRODUCT BACK.
OTHER BRANDS LIKE J-CREW AND LEVIS ARE TRYING BUY BACK PROGRAMS TO KEEP GOODS IN CIRCULATION.
RETURNS IS A PROBLEM THAT’S NOT GOING AWAY. 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.
FOR SAN – I’M SIMONE DEL ROSARIO.
RETAILERS ARE FIGHTING FOR YOUR BUSINESS THIS HOLIDAY SEASON. FOR MORE ON WHO PLANS TO WIN, SEARCH “HOLIDAY SHOPPING” FOR THIS STORY ON SAN.COM OR THE STRAIGHT ARROW NEWS APP.
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