Liao Pan, China News Service via Getty Images
What you need to know
- National Retail Federation reported that retail stores are hiring employees to manage returns during holiday seasons, when they are expected to increase by nearly 20%.
- Consumers look for free, convenient return policies while shopping online — and may avoid retailers that don't offer them.
- As the cost to process returns increases, many merchants have begun charging for certain returns.
You're not the only one worrying about whether your relatives will return the presents you got them this year.
The retail industry is bracing itself for a spike in return rates this holiday season. It highlights the tension between the consumer who wants returns that are easy and hassle-free and the companies worried about costs.
Online shoppers are likely to pay more attention to return policies during the holiday season, according to surveys of consumers and retailers published last week by the National Retail Federation. Companies that want to take a piece of the $980 Billion the group estimates Americans will spend in the winter months are at a disadvantage.
Three-quarters (roughly 75%) of consumers view free returns as an incentive. “important” Online shopping is not without consideration. NRF’s surveys in collaboration with Happy Returns of UPS, which facilitates returns, show that nearly half had decided not to purchase an item they couldn’t return easily. Blue Yonder Supply Chain Technology, an American firm that specializes in supply chain technologies, stated this September.)
The NRF reported that retailers are hiring staff in preparation for holiday returns rates to be nearly 20 percent higher than normal. A survey revealed that a quarter of respondents are hiring people to deal with returns in stores, warehouses and corporate offices.
Almost a fifth of sales in 2024 is expected to be returned
So far, holiday spending has been very strong. This is largely because of the explosive growth in online sales. But the inflation seen in recent years is still straining Americans, and analysts generally expect consumer spending to grow modestly — about 3% — from last holiday season.
Retail trade group says that even after the holidays, returning items is a difficult task. This is because in recent years the amount of products returned has increased. The National Retail Federation reported that companies expect to return 17% on average of all their sales in 2024 by the end year. This is more than twice the 8% rate of returns they experienced last year.
According to the survey, three-fifths (35%) of retailers have been forced to choose between processing returns or filling new orders due to the strain on their logistics and warehouse operations. The survey found that more retailers charge their customers to return certain items due to rising costs of shipping.
All this seems to leave retailers in a tricky situation: Many want to enhance the return experience, but also curtail how often customers use it, according to the NRF.
“Improving the returns experience and reducing the return rate are viewed as two of the most important elements for businesses in achieving their 2025 goals — ranking above increasing online sales,” The trade group stated.
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