Shoppers Love the Era of Free Returns. Retailers, Not So Much.

Key Takeaways

• Retailers are hiring staff to handle returns, which are expected to be nearly 20% higher more than normal during the holiday season, the National Retail Federation said.
• Consumers look for free, convenient return policies while shopping online — and may avoid retailers that don’t offer them.
• Merchants want to attract shoppers, but more have started charging for some types of returns due to the rising cost of processing returns.

You’re not the only one worrying about whether your relatives will return the presents you got them this year.

Retailers are bracing for returns to surge this holiday season, highlighting a tension between consumers who expect returns to be easy and free and companies concerned about the cost of making the experience convenient. 

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. This raises the stakes for companies looking to capture some of the about $980 billion the trade group expects Americans to spend this winter.

Roughly three-quarters of consumers see free returns as an “important” consideration when shopping online. Nearly half have decided not to buy an item that couldn’t be conveniently returned, according to surveys the NRF conducted in partnership with Happy Returns, a UPS (UPS) company that facilitates returns. (That number was even higher for younger consumers, supply chain technology firm Blue Yonder said in September.)

Retailers are staffing up in anticipation of return rates coming in nearly 20% above normal during the holidays, the NRF said. About a third are hiring staff to handle returns in warehouses, stores and at corporate offices, the survey said.

Nearly a Fifth of 2024 Sales Expected to Be Returned

Holiday spending has been strong so far, largely due to soaring 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.

Long after the holidays end, processing returns remains a challenge because the volume of items sent back has jumped in recent years, the retail trade group said. Companies, on average, expect 17% of their 2024 sales to be returned by the end of the year, more than double the roughly 8% return rate in 2019, the National Retail Federation said.

The stress on logistics operations and warehouses has forced three-fifths of retailers to pick between using resources to fill new orders or process returns, the survey said. More retailers are charging customers for certain types of returns amid the rising cost of shipping and processing these items.

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 said.