Retailers face record $115 billion in holiday returns this year

Retailers are set to face record levels of holiday returns over the next few weeks further impacting their margins after a torrid year for the industry.

A record $115 billion worth of unwanted gifts are due to be returned across the US this year, largely due to the huge boom in online shopping during the pandemic.

Ecommerce orders are reportedly three times more likely to be returned than items bought in store, with gifts and clothing both having even higher return rates.

READ MORE: Retail returns marketing tactic: a simple model but at what cost?

Around half of all items returned have marginal or no salvage value for retailers according to Forrester, seeing an estimated 6 billion pounds of returned goods going to landfill last year.

Not only is this set to further eat into retailers’ profits, but the process of processing returns contactlessly is complex and costly, forcing retailers to rely on third party logistics firms.

Conversely this has seen such companies report skyrocketing sales during the holiday season, with US delivery giant FedEx announcing its best ever quarter thanks to the “record high” levels of returned packages.

Despite the clear impact returns have on retailer already battered margins, Forrester’s analyst Sucharita Kodali warned that consumers would be reluctant to buy “from retailers in the first place if they don’t like the returns policy”.

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