After a strong start to the holiday season, consumer spending is on track to reach record levels this year. But many of those purchases will soon be returned.
December’s peak shopping days are closely followed by the busiest month for sending items back, which experts dub “Returnuary.”
This year, returns are expected to amount to 17% of all merchandise sales, totaling $890 billion in returned goods, according to a recent report by the National Retail Federation — up from a return rate of about 15% of total U.S. retail sales, or $743 billion in returned goods, in 2023.
Even though returns happen throughout the year, they are much more prevalent during the holiday season, the NRF also found. As shopping reaches a peak, retailers expect their return rate for the holidays to be 17% higher, on average, than usual.
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“Ideally, I hope there is a world in which you can reduce the percent of returns,” said Amena Ali, CEO of returns solution company Optoro, but “the problem is not going to abate any time soon.”
How returns became an $890 billion problem
With the explosion of online shopping during and since the pandemic, customers got increasingly comfortable with their buying and returning habits and more shoppers began ordering products they never intended to keep.
Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send back, a practice known as “bracketing,” according to Happy Returns.
Even more — 69% — of shoppers admit to “wardrobing,” or buying an item for a specific event and returning it afterward, a separate report by Optoro found. That’s a 39% increase from 2023.
Largely because of these types of behaviors, 46% of consumers said they are returning goods multiple times a month — a 29% jump from last year, according to Optoro.
All of that back-and-forth comes at a hefty price.
“With behaviors like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics,” David Sobie, Happy Returns’ co-founder and CEO, said in a statement.
What happens to returned goods
Processing a return costs retailers an average of 30% of an item’s original price, Optoro found. But returns aren’t just a problem for retailers’ bottom line.
Often returns do not end up back on the shelf, and that also causes issues for retailers struggling to enhance sustainability, according to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company.
Sending products back to be repackaged, restocked and resold — sometimes overseas — generates even more carbon emissions, assuming they can be put back in circulation.
In some cases, returned goods are sent straight to landfills, and only 54% of all packaging was recycled in 2018, the most recent data available, according to the U.S. Environmental…
Read More: The busiest return season of the year is about to begin