If you want to return that hideous sweater your aunt gave you as a gift, you should read the fine print.
According to goTRG, a logistics company focused on returns, 6 in 10 retailers have changed their return policies this year, shortening the time frame shoppers have to send an item back, charging fees, or telling shoppers they’ll have to cover the shipping costs themselves.
“According to Ray Wimer, assistant professor of retail practise at Syracuse University’s Martin J. Whitman School of Management, “most consumers expect free shipping… and a lot of consumers expect free returns as well.” But “If you’re the retailer, you’re paying for shipping twice and losing the sale if they return the items, so it’s a costly process.”
The holiday season is one exception to the new rules, as many retailers extend the return window for customers.
Old Navy, Gap, and Banana Republic, for example, reinstated a 30-day return policy this summer after temporarily extending it to 45 days during the peak of the pandemic. Purchases made online or in-store between Nov. 1 and Christmas Eve, however, can be returned until Jan. 15.
Still, there are some changes that shoppers should be aware of as they consider returning gifts and other purchases in January and beyond.
How much time do I have to return Christmas presents?
Returns windows had already been expanding over the last decade, with some retailers giving customers several months or more to return merchandise in order to compete with online rivals like Amazon. Then, during the COVID-19 pandemic, retailers extended time for homebound Americans to return items they couldn’t try on or see in a store.
However, many retailers are now shortening their return periods, typically to 30 days, in order to reduce the amount of merchandise returned by customers and give stores a better chance of reselling returned items before they go out of season, according to retail experts.
Retailers are also increasingly informing customers that they must pay to return an item. According to Inmar Intelligence, a data and technology solutions company focused on manufacturers, brands, and healthcare companies, 36% of 300 retailers surveyed this year said they do not offer free shipping on returns, more than doubling the number who refused to cover those costs last year.
Handling returns costs retailers a lot of money, eroding their profits.
According to the National Retail Federation, an industry trade group, over $761 billion in merchandise was returned last year, accounting for nearly 17% of all retail sales.
“People were obviously given some really generous return policies during the pandemic, from long return windows to free returns,” says Erin Halka, a retail strategist at supply-chain technology firm Blue Yonder.
With the rise of online shopping, consumers have become accustomed to a practise known as “bracket buying,” in which they order varying sizes and colours of the same outfit, returning what they don’t like or doesn’t fit.
However, all of these returns are putting a strain on a bottom line that is already being strained by rising fuel and labour costs.
According to Halka, it costs a retailer about $15 per returned item, which includes shipping, reprocessing, and the labour required to get the clothing, appliance, or piece of furniture ready for resale.
“If a retailer offers free shipping and returns, that’s a lot of cost in that good that the retailer is eating,” says Thomas Borders, general manager of Inmar Intelligence’s product lifecycle cloud.
According to Inmar, 31% of retailers anticipate that between 11% and 20% of the merchandise they sell this holiday season will be returned, while 16% anticipate that between 21% and 30% of the items they sell will be returned.
According to Andrew Hogenson, global managing partner of retail, consumer goods, and logistics for Infosys Consulting, these items frequently need to be heavily discounted, perhaps by 30% or 40%. In addition, if it is out of season, a retailer may be unable to resell it at all.
