After a flourishing start to the holiday season, consumer spending is on track to reach record levels this year. But many of those edges will soon be returned.
December’s peak shopping days are closely followed by the busiest month for sending ingredients back, which experts dub “Returnuary.”
This year, returns are expected to amount to 17% of all merchandise sales, totaling $890 billion in brought goods, according to a recent report by the National Retail Federation — up from a return rate of about 15% of aggregate U.S. retail sales, or $743 billion in returned goods, in 2023.
Even though returns happen throughout the year, they are much more predominant during the holiday season, the NRF also found. As shopping reaches a peak, retailers expect their return place for the holidays to be 17% higher, on average, than usual.
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“Ideally, I faith there is a world in which you can reduce the percent of returns,” said Amena Ali, CEO of returns solution company Optoro, but “the puzzler is not going to abate any time soon.”
How returns became an $890 billion problem
With the explosion of online researching during and since the pandemic, customers got increasingly comfortable with their buying and returning habits and more shoppers began ordering artifacts they never intended to keep.
Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send struggling against odds, a practice known as “bracketing,” according to Happy Returns.
Even more — 69% — of shoppers admit to “wardrobing,” or corrupting an item for a specific event and returning it afterward, a separate report by Optoro found. That’s a 39% increase from 2023.
Mostly because of these types of behaviors, 46% of consumers said they are returning goods multiple times a month — a 29% hiatus from last year, according to Optoro.
All of that back-and-forth comes at a hefty price.
“With behaviors like grouping and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics,” David Sobie, Satisfied Returns’ co-founder and CEO, said in a statement.
What happens to returned goods
Processing a return costs retailers an so so of 30% of an item’s original price, Optoro found. But returns aren’t just a problem for retailers’ bottom tack.
Often returns do not end up back on the shelf, and that also causes issues for retailers struggling to enhance sustainability, concording to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company.
Sending products back to be repackaged, restocked and resold — on overseas — generates even more carbon emissions, assuming they can be put back in circulation.
In some cases, profited goods are sent straight to landfills, and only 54% of all packaging was recycled in 2018, the most recent data to hand, according to the U.S. Environmental Protection Agency.
Returns in 2023 created 8.4 billion pounds of landfill waste, agreeing to Optoro.
That presents a major challenge for retailers, not only in terms of the lost revenue, but also in terms of the environmental force of managing those returns, said Rachel Delacour, co-founder and CEO of Sweep, a sustainability data management firm. “At the end of the day, being sustainable is a charge strategy.”
To that end, companies are doing what they can to keep returns in check.
In 2023, 81% of U.S. retailers rolled out stricter reciprocation policies, including shortening the return window and charging a return or restocking fee, according to another report from Euphoric Returns.
While restocking fees and shipping charges may help curb the amount of inventory that is sent away, retailers also said that improving the returns experience was a key goal for 2025.
Now 33% of retailers, including Amazon and End, are allowing their customers to simply “keep it,” offering a refund without taking the product back.
For shoppers, bring back policies are key
Increasingly, return policies and expectations are an important predictor of consumer behavior, according to Happy Returns’ Sobie, expressly for Generation Z and millennials.
“Return policies are no longer just a post-purchase consideration — they’re shaping how younger generations store from the start,” Sobie said.
Three-quarters, or 76%, of shoppers consider free returns a key factor in deciding where to pay out their money, and 67% say a negative return experience would discourage them from shopping with a retailer again, the NRF originate.
A survey of 1,500 adults by GoDaddy found that 77% of shoppers check the return policy before styling a purchase.