With rising costs squeezing margins, many retailers are rethinking their return policies, shortening return times and even charging a fee for returns or restocking, according to Spencer Kieboom, founder and CEO of Spencer Kieboom. Pollen Returns, a returns management company.
Stores like Gap, Old Navy, Banana Republic and J. Crew (which was once known for its generous return policy throughout the life of the garment) have shortened their regular return periods to one month. Holiday shoppers have some reprieve: J. Crew and others are currently offering extended holiday returns and exchanges.
Anthropologie, REI, and LL Bean (which also once promised lifetime returns) now charge a fee for mail-in returns — all around $6.
“These adjustments to the return policy are not to cover costs,” Kieboom said. “They’re really there to discourage consumers from coming back.”
A United Parcel Service (UPS) driver pushes a cart of packages toward a delivery van on a New York street.
Victor J. Blue | Bloomberg | Getty Images
With the explosion of online shopping during the pandemic, “free returns were a highly convenient model that the customer appreciated,” said Erin Halka, senior director of supply chain consulting firm Blue Yonder. Now, with higher labor and shipping costs, it’s costing retailers “a huge amount of money,” she said.
“Return fees are one way to cover some of those costs,” she said. “It can also discourage customers from over-purchasing, as at least 10% of returned goods cannot be sold.”
As retailers struggle with excess inventory, “returns often don’t end up back on the shelf,” and that creates a problem for retailers trying to streamline spending and improve sustainability, Kieboom said.
“The supply chain is designed to go in one direction,” said Lauren Beitelspacher, associate professor and chair of the marketing department at Babson College.
“The more money retailers lose in revenue, the more they will have to make up for it by raising prices,” Beitelspacher said.
“Changing the return policy is an easier pill to swallow for the customer than increasing the purchase price.”
Still, shoppers love free returns almost as much as free shipping. In fact, 98% of consumers said free shipping is the most important factor when shopping online, followed by more than three-quarters who said the same about free returns, according to a recent report from PowerReviews. Affluent shoppers were even more likely to favor a free return policy.
If returns are important, check the policy before you buy, experts say. It is often not immediately clear, said Halka. “Usually you have to dive into the fine print.
Expect restrictions on what can be sent back and when, she noted. “The typical window now is 30 days.”
Factor the return policy into your purchasing decision as it can affect your bottom line. “You have to find the return policy that works best for you,” Kieboom said.
And to avoid returns as much as possible, consider shopping in person when possible, Beitelspacher suggested. “Most returns come from regret because it’s not what we expected. Shopping in person minimizes the gap between expectation and reality.”