The holiday shopping season has come to an end, but for many the headaches are just beginning as they venture out to return or exchange those unwanted gifts. This year more retailers are charging fees to process returns, adding insult to injury for shoppers already grappling with higher prices and economic uncertainty.
Record Holiday Sales Accompanied by Changing Return Policies
Holiday retail sales rose a better-than-expected 7.6% this year even amidst inflation pressures (source), aided in part by a strong last minute surge in shopping. However, about two in five shoppers plan to return gifts this season according to one survey (source). Retailers estimate nearly 20% of items sold get returned, with the post-holiday return and exchange period generating its own annual retail peak. Unfortunately shoppers are finding less generous return policies at some major chains.
A growing list of retailers including Bed Bath & Beyond, Barnes & Noble, Gap Inc. and others are now charging return-shipping fees or restocking fees. One analysis found that 81% of retailers now charge consumers for returns in some form, whether upfront fees at certain price points or deducting the return shipping costs from refunds (source). Return fraud and extra supply chain costs are being cited for the added fees.
| Store | Return Policy |
|---|---|
| Walmart | 90 day return window. Deducts return shipping fee from refunds. |
| Target | Must return unwanted items by Jan. 24, 2024. Deducts return shipping fee from refunds. |
| Amazon | Items shipped and sold by Amazon.com can be returned within 30 days for refund of item cost. Return shipping not refunded. |
| Best Buy | Most products can be returned for refund within 15 days. Return shipping fee deducted from refund. |
“Stores are taking a tougher line and reining in what had been an extremely lenient return policy,” said Neil Saunders, managing director at GlobalData Retail (source). “They have started to tighten the terms, and introduce charges and other fees associated with returns.”
Bracing for Impact of Returns Volume
The day after Christmas kicks off retail’s biggest return week, where stores can see nearly a quarter of their annual returns traffic. Shoppers flocked to malls and shopping centers yesterday, with long lines of gift returners mixed among those still perusing post-holiday sales and clearances (source).
Returns volume is expected to further surge next week as more consumers open late arriving packages and discover unwanted items. Retailers and logistics firms must quickly process, inspect and reshelf the incoming returns while also continuing to handle new e-commerce orders and in-store shopping.
Adding charges to returns enables retailers to recoup more costs. “Ultimately the consumer ends up paying for all of this one way or another,” said Rick Watson, CEO of RMW Commerce Consulting (source). “Whether they pay for it directly with the return fees or whether the retailer factors it in as a cost of doing business that gets passed along to consumers down the road in higher prices.”
Consumers Left Footing the Bill
Shoppers are being squeezed coming and going this holiday season. Prices surged 8.5% across all items compared to last year, forcing many to cut back on gifts or purchases for themselves. Now added return charges leave some reluctant gift recipients stuck with items they don’t want.
“I’m frustrated,” said Macy’s shopper Susan Davis. “It’s bad enough nothing seems affordable anymore. Now I can’t even return gifts I don’t like without getting charged? I’ll think twice about where I spend my money next Christmas.” (source)
Experts advise carefully checking return policies before purchasing, including browsing retailer websites for fee disclosures. For expensive items, save return shipping receipts as proof of sending back. Take advantage of free in-store returns when possible instead of mailing items.
If stuck with an unwanted gift, consider reselling it through sites like Facebook Marketplace and Nextdoor to recoup some value. This holiday season over 35% of returns are expected to be resold (source). Clothing returns in particular often end up flooding secondary markets each January.
Brace for Higher Prices and Tighter Return Windows Ahead
Retail analysts say the era of free and easy returns with extended holiday return periods may be ending for all but a few categories like luxury goods. Chains facing thinner margins coming off the pandemic cannot afford the generous policies they once offered.
Look for more retailers to implement shipping and restocking fees in 2024, along with shorter return windows. Competitors will take note of changes by major national brands this holiday season as they reevaluate their own policies. TJ Maxx recently cut its normal 30 day clothing return period to just 14 days for holiday items.
Higher supply chain and processing costs will inevitably get passed to consumers through some combination of return fees and overall higher prices. Shoppers wanting to avoid return hassles are advised to carefully check items before purchasing, research retailer policies, save gift receipts and bring back unwanted items as early as possible after the holidays.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
