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Is it time to shut down the free returns party?

November 7, 2022Written by Tom Ryan

Photo: RetailWire

Retailers are shortening their returns windows and even charging return fees to mitigate rising costs. According to reports from The Wall Street Journal and CNBC:

The Gap Inc. in June shortened the return window for its Athleta, Gap, Banana Republic and Old Navy brands from 45 to 30 days. J.Crew halved its return window from 60 to 30 days.
Zara, J.Crew, JCPenney, Abercrombie & Fitch, Anthropologie, REI and LL Bean are among those charging from $3.50 to $8.00 for mailed returns.

Consumers grew more accustomed to using their homes as dressing rooms during the COVID-19 shutdowns. The National Retail Federation reported that 16.6 percent of U.S. retail sales were returned in 2021 and online return rates were at 20.8 percent. Returns are costly as only 48 percent of returns can be resold at full price, according to Gartner research. Higher labor, shipping and storage expenses are all increasing return costs this year. "Charging for returns is one way to cover a portion of that cost," Erin Halka, senior director at Blue Yonder, told CNBC. "It also can deter customers from overbuying, since at least 10 percent of returned goods cannot be resold." “Everybody wanted to have, like, a superliberal return policy just to be competitive with e-commerce companies like Amazon and others,” Sucharita Kodali, an analyst at Forrester, told Marketplace. Now, with about 30 percent of apparel and shoes purchased online returned, “there’s a huge carbon footprint that’s associated with it, and that’s a huge cost” overall. A recent PowerReviews study found free returns (76 percent) second only to free shipping (96 percent) as the top consideration factors when shopping online. Retailers are still, however, extending return policies around holiday selling, and many chains offer 90-day returns on most items. Nordstrom is among the few without a time limit or restocking fee. Nordstrom writes on its website, “We will do our best to take care of customers and deal with them fairly; we ask that our customers treat us fairly as well. From time to time we may not accept a return. There are no time limits for returns or exchanges.”

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