It would appear that retailers booked a robust 2021 holiday season, except that the new year brings with it an old problem that’s gotten worse—
How to deal sustainably with the annual avalanche of returns?
Consumers love liberal return policies. They’re also paying closer attention than ever to how brands are dealing with issues like returns and waste in general. Amazon earned one of its many black eyes this past year when an undercover investigation by UK-based iTV NEWS discovered the company has been destroying millions of perfectly good, unsold stock items in the UK each year.
The good news is that, according to a Mastercard report, shoppers spent 8.5% more in 2021 than they did a year earlier, and almost 11% more than pre-pandemic, two years ago. The cheer is muted, however, by the startling 6.8% jump in the government’s Consumer Price Index for 2021.
The bad news is that experts estimate shoppers will set a new high in post-holiday returns.
When the count is final, the tally could surpass half a trillion dollars’ worth, about 10% of the nearly $5 trillion estimated for the year’s total U.S. retail sales. Estimates for this season include an increase of 13% year-over-year and a surge of 45% above the previous five-year average. Shopify, an e-commerce platform, reported in August that online merchants take the biggest hit with a return rate of between 20% and 30%.
Return stats get scant attention outside of the industry, but the logistics and high cost of handling unpackaged, tampered merchandise is a significant drag on profits in a business that lives on thin margins. In a year when the industry is focusing on sustainability, transparency, and ethical behavior, no retailer can afford the kind of bad press that Amazon has gotten, or that a raft of luxury fashion houses (e.g., Buberry’s, Cartier) have gotten in recent years for destroying millions of dollars of new, unsold clothes.
The returns issue has no simple fix. Not only are consumers accustomed to lenient return rules, an analysis done a few years ago by ecommerce data cruncher Granify found that online consumers rank returnability as the most important factor in deciding whether to make a purchase, ahead of customer testimonials and price.
A seamless return experience is an aspect of the customer experience that has been demonstrated to increase sales.
Retailers have some tweaks that help dampen the rate of returns. One of the surprising ones turned up in a 2016 study at the University of Texas that looked at 21 research papers on consumer behavior from fields including economics, marketing, decision science, consumer psychology and operations research. The authors found that longer return periods of up to 90 days seem to discourage returns, and speculated that “the longer consumers possess a product, the more attached to it they become and less likely they are to return it.”


What Retail Executives Say About Supply Chain Disruption: Shortages, Pricing and Delays
We partnered with The Wharton Baker Retailing Center to create a comprehensive infographic exploring our findings.
View the Infographic

The State Of Consumer Spending: Gen Z Influencing All Generations To Make Sustainability-First Purchasing Decisions
We partnered with The Wharton Baker Retailing Center and asked consumers in the U.S. how sustainable practices are impacting shopping habits and purchase decisions.
Read the Report
InsightSuite for Small Business
Specialized Tools for Small & Emerging Businesses
The fastest and most cost effective way to increase sales, profits and sell-in for growing businesses and digitally native brands.
Learn more

Maximize Value, Speed & Profit
Learn how to leverage Voice of the Customer Analytics and 3D Product Creation to make more profitable products, faster.
Get the Free E-book

Kohl's Creates Value W/Predictive Analytics
Learn How First Insight's Predictive Tools Fuel Kohl's Success
As one of the world's leading omnichannel retailers with more than 1,100 stores in 49 states, Kohl's is leveraging First Insight's predictive analytics solution and voice-of-the-customer data to improve their business.
Watch the Webinar
Consumer Sustainability Survey 2021
The First Industry-Wide Consumer Study On Shoe Sustainability
This industry-wide survey aims to create a critical baseline that brands and retailers can use to ensure they understand what consumers actually comprehend, what terms and phrases resonate best, and what areas they should prioritize.
Download the Webinar & Findings
Navigating Disruption
How The Rockport Company is Optimizing Assortments and Pricing with Data + Digital Product Testing
Learn how The Rockport Company created a new product playbook powered by the Voice of the Customer and predictive tools.
View the Webinar & Highlights
HOTTER SHOES ATTRACTS YOUNGER AUDIENCE VIA ‘VOICE OF CUSTOMER’ ANALYTICS
While the Covid-19 pandemic hit most retailers hard, it created uniquely intense challenges for Hotter Shoes. Hotter needed to build up its e-commerce presence and appeal to a new group of shoppers at the same time.
Read the Case StudyThe authors concluded that not all return policies are the same, suggesting a fertile area for retailers to invest research dollars.
In future columns we’ll discuss the other side of the returns issue: what’s happening to all that un-restockable merchandise consumers are sending back? What are brands getting right and what are they still doing that could stain their sustainability credentials?