‘It just doesn’t fit’: Retailers grapple with unprecedented number of returns

BOSTON — Holiday shopping reached record levels last year, but a record number of purchases were also sent back.

The National Retail Federation projects retail returns in 2024 to amount to 17% of all merchandise sales, adding up to $890 billion in returned goods.

That’s increased from a return rate of about 15% of U.S. retail sales, or $743 billion in returned goods, in 2023.

Retail experts believe the explosion of online shopping since the pandemic is fueling the unprecedented number of returns.

“We are always expecting free returns,” said Alexander DePaoli, Associate Professor at Northeastern University’s D’Amore-McKim School of Business. “A lot of consumers will not buy from a company online that does not offer free returns.”

That expectation has evolved into trends like bracketing, buying the same item online in multiple sizes or colors, and wardrobing, buying an item for a specific event, and returning it afterward.

“Retailers are having to adapt to the fact that their return policies are being abused in essence,” said DePaoli.

The convenience of online shopping now makes it easier than ever to get multiple sizes or colors delivered to your home soon after purchasing.

“You can’t beat that convenience, but you do suffer in quality I think,” said shopper Marissa Pedone. “It looks like it’s going to be great, and I get it, and it just doesn’t fit how I want it to.”

Some retailers are tightening their return policies, charging restocking fees, or issuing statements that they reserve the right to reject a return.

Other small independently owned businesses are reiterating their existing return policies that aren’t as flexible as large retailers.

“Our return policy is that when a customer brings an item back, they get store credit for a future purchase,” said Philip Saul, owner of Sault New England in Boston’s South End and Portsmouth, NH.

Sault has that ten-day exchange policy posted at the register and on store receipts.

“The word is on the street that it’s not you can return anything and get your cash back,” explained Saul. “We have to turn around the merchandise and mark it down in that same window.”

According to Optoro, processing a return costs retailers an average of 30% of an item’s original price.

The software company that specializes in returns found 46% of shoppers make returns multiple times a month.

“Now with the increase in e-commerce at a store, we’d like to say that the bedroom is now the dressing room,” said Casey Chroust, Optoro’s Chief Operating Officer.

Chroust said returns in 2023 created 8.4 billion pounds of landfill waste.

He told Boston 25 News an increasing number of retailers are investing in returns technology not only to address lost revenue but also to minimize the environmental impact. ”Which can reduce costs, reduce labor, reduce shipping, help get items back to stock and reuse and resale rather than going to a landfill,” he added.

They key goal for many retailers moving forward is to try to curb the amount of inventory sent back while making sure that their return policies are appealing to a new generation of shoppers.

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