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Retailers are facing an $890 billion dilemma with returns


Holiday shopping is expected to reach record levels this year, with a large portion of purchases being returned. Returns in 2024 are predicted to amount to 17% of all merchandise sales, totaling $890 billion, up from 15% or $743 billion in 2023. The holiday season sees a peak in returns, with retailers expecting a 17% higher return rate than the annual average.

The increase in returns is attributed to behaviors like “bracketing” and “wardrobing,” where customers buy multiple sizes or colors or purchase items for specific events and return them afterward. This has led to 46% of consumers returning goods multiple times a month, causing strain on traditional systems.

Processing a return costs retailers an average of 30% of an item’s original price, and not all returns end up back on the shelf. Many returned items are sent overseas, generating more carbon emissions, leading to environmental concerns. In 2023, returns created 8.4 billion pounds of landfill waste.

Retailers are implementing stricter return policies, such as shorter return windows and restocking fees, to curb returns. Some are also offering customers the option to keep the product and receive a refund, while others are launching buyback programs. Return policies and expectations are shaping consumer behavior, with free returns being a key factor for 76% of shoppers. Negative return experiences can dissuade customers from shopping with a retailer again. Retailers are working to find sustainable solutions for managing returns and reducing their environmental impact.

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www.nbcnews.com

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