Returnuary: The Busiest Month of Returns After the Holiday Season

What to Know

• After this season’s peak holiday shopping days, retailers expect their return rate to be 17% higher, on average, than usual.
• By the end of 2024, returns are expected to total $890 billion.
• The growing amount of returned merchandise is a major problem for retailers, and comes at a high environmental cost.

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.

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.

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 Protection Agency.

Returns in 2023 created 8.4 billion pounds of landfill waste, according to Optoro.

That presents a major challenge for retailers, not only in terms of the lost revenue, but also in terms of the environmental impact of managing those returns, said Rachel Delacour, co-founder and CEO of Sweep, a sustainability data management firm.

To that end, companies are doing what they can to keep returns in check.

For Shoppers, Return Policies Are Key

Increasingly, return policies and expectations are an important predictor of consumer behavior, according to Happy Returns’ Sobie, particularly for Generation Z and millennials.

“Return policies are no longer just a post-purchase consideration — they’re shaping how younger generations shop from the start,” Sobie said.

Three-quarters, or 76%, of shoppers consider free returns a key factor in deciding where to spend their money, and 67% say a negative return experience would discourage them from shopping with a retailer again, the NRF found.

A survey of 1,500 adults by GoDaddy found that 77% of shoppers check the return policy before making a purchase.

Conclusion

The return season, dubbed “Returnuary,” is a challenging time for retailers, with the National Retail Federation expecting returns to total $890 billion in 2024. The problem is not limited to the holiday season, as returns happen throughout the year, but it is more prevalent during this period. With the rise of online shopping, customers are becoming more comfortable with their buying and returning habits, leading to a higher return rate.

FAQs

* Q: What is the expected return rate for the holiday season?
A: 17% higher than usual, according to the National Retail Federation.
* Q: How much is expected to be returned in 2024?
A: $890 billion, according to the National Retail Federation.
* Q: Why are returns a problem for retailers?
A: Returns not only affect retailers’ bottom line but also have an environmental impact, with 54% of all packaging not being recycled and 8.4 billion pounds of landfill waste created in 2023.