Retailers roll out stricter return policies ahead of the holidays

An increase in gift return is always closely monitored during holiday shopping season.

It may prove difficult to get things back this year for free or at a reduced cost.

A recent survey of retail executives found that 60% of retailers are changing their returns policies. Fewer promises free returns. 

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According to the most recent data from the National Retail Federation, retailers anticipate returning 18% (or $158 billion) of the merchandise they sell during the holiday shopping season.

Overall, the U.S. return rate was 16.6%, or $761 million in returned goods. By 2022, less businesses will be in a position afford to pay such a steep price.

According to Spencer Kieboom (founder and CEO of Retailer.com), retailers are reconsidering their return policies as rising costs squeeze margins. They may shorten the return window or charge a restocking fee. Pollen Returns, a return-management company. 

Expect shorter return windows, restocking fees

While preparing a vehicle to be delivered at a United States Postal Service processing center in Washington, D.C., a letter carrier holds Amazon.com parcels.

Andrew Harrer | Bloomberg | Getty Images

Gap and Old Navy stores, Banana Republic, J. Crew, once a well-known store for its generous return policy which lasted the life of a garment, has shortened their return window to one month. J. is offering a reprieve for year-end shoppers. Crew and others offer extended holiday returns and exchanges.

Anthropologie offers REI and L.L. Bean (which also once promised lifetime returns), there’s now a fee — all around $6 — for mailed returns.

Kieboom stated that these adjustments to return policies do not cover costs. “They are there to discourage the consumer from returning.” 

Margins are being squeezed by rising costs

Blue Yonder’s senior director Erin Halka said that free returns were a popular convenience model during the pandemic. It is now more expensive for retailers to maintain, due to higher shipping and labor costs.

She said that charging for returns is one way to pay a portion of the cost. It can also deter customers overbuying since it prohibits the reselling of at least 10%.   

Kieboom explained that retailers often struggle with excessive inventory. “Often returns don’t end up back on shelves,” which can cause a problem in retailers who are trying to cut costs and improve sustainability.

The supply chain should only go one direction.

Lauren Beitelspacher

Babson College Associate Professor

Lauren Beitelspacher (associate professor and chair, Babson College’s marketing department) stated that “the supply chain is designed for one direction.”

Beitelspacher stated that the more retailers lose on returns, the more they must make up by raising prices.

“Changing the return policy is easier for customers to swallow than increasing the purchase price.

How to avoid paying return fees

Despite this, online shoppers still love free returns as much as free shipping. According to PowerReviews, 98% of online shoppers said free shipping was their most important consideration. More than three quarters said the same about returns. Even more wealthy shoppers were likely to support a free return policy.

Experts say it is important to understand the policies before buying if you want to have the option of returning. Halka stated that it is often not obvious. “You usually have to look into the fine print.”

She stated that there will be limitations on the items that can and cannot be returned, as well as when they can be sent back. “A 30-day window is typical.”

It is worth the effort to make the best decision possible about your purchase. Kieboom stated, “You need to find the best return policy for you.”

Beitelspacher suggests that shopping in person is a good option if you want to avoid returning items. “Most returns are due to regret over something that wasn’t what we expected.” She stated that shopping in person reduces this expectation-reality gap.

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