Holiday Shopping Expectations to Reach Record Levels, but Returns Will Cost Billions
Holiday shopping is expected to reach record levels this year, with consumers spending billions on gifts, but a growing share of those purchases will likely end up being returned. According to a new report by the National Retail Federation and return management company Happy Returns, returns in 2024 are expected to total $890 billion, or 17% of all merchandise sales. This is up from 15% in 2023, which saw $743 billion in returned goods.
Returns are a significant problem for retailers, as processing a return costs them an average of 30% of the item’s original price. Additionally, not all returns end up being resold, which can contribute to environmental issues and generate additional carbon emissions. In fact, returns in 2023 created 8.4 billion pounds of landfill waste.
Retailers are taking steps to mitigate the impact of returns, including implementing stricter return policies, such as shorter return windows and restocking fees. Some companies are also allowing customers to keep returned items and offer a refund instead. A quarter of retailers, including Amazon and Target, are already offering this option.
The expectation of free returns and a smooth returns experience are becoming increasingly important for consumers, particularly younger generations. Three-quarters of shoppers consider free returns a key factor in deciding where to shop, and 67% say a negative return experience would discourage them from shopping with a retailer again. Retailers are rethinking their return policies to accommodate these changing expectations, as return policies are no longer just a post-purchase consideration, but are shaping how younger generations shop from the start.