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Holiday Returns Will Cost Retailers More This Year

Despite an increase in holiday spending, retailers are facing a financial crunch with an increase in holiday returns that will cost them more money. Holiday spending between Nov. 1 and Dec. 24 was up 8.5 percent in 2021, according to Mastercard Spending Pulse. But, returns processor Optoro predicts that holiday returns will cost retailers up to 50 percent more than returns did last year.

That increase will be a tough pill for businesses to swallow with already elevated costs because of supply chain and labor issues. Optoro estimates that it will cost retailers $33 to process the return of a $50 item, up 59 percent from last year. The company also expects consumers will return $120 billion worth of goods by the end of January 2022, with two out of three shoppers returning items. 

The National Retail Federation (NRF) estimated that 13.3 percent of holiday goods sold last year were returned, nearly $101 billion worth. This year, NRF expects consumers to return $112 to $114 billion in products. 

While a potential burden, the increase in returns this year also gives retailers a chance to differentiate themselves from their competitors and provide an extra level of customer service. Offering flexible return policies that make it easy for consumers to return items will make customers more likely to want to shop with that retailer again in the future. 

About Lindsey Thompson

Lindsey joined the NHPA staff in 2021 as an associate editor for Hardware Retailing magazine. A native of Ohio, Lindsey earned a B.S. in journalism and minors in business and sociology from Ohio University. She loves spending time with her husband, two kids, two cats and one dog, as well as doing DIY projects around the house, going to concerts, boating and cheering on the Cleveland Indians.

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