The real reason stores let us return so much – even when it costs them
Be honest: Have you ever returned an item after using it? If you have, you’re not alone. About 40% of U.S. shoppers admit to doing so. But why?
Straight Arrow News wanted to learn about the massive impact return policies have on our retail economy and how they play out in real life. So we spent weeks pulling off a retail experiment: I went to Target for a shirt, Sephora for lipstick and Costco for a 6-foot-tall Bluey holiday inflatable. Then I returned them all. What I learned says a lot about how we shop in 2025 and how retailers have learned to expect returns.
The National Retail Federation estimated that product returns reached $890 billion in 2024, up from $743 billion in 2023. That number reflects not just shipping errors or damaged goods, but a consumer mindset shaped by years of “free and easy” return policies.
Retail experts told SAN that online shopping plays a big role. Many customers practice “bracketing” — or ordering multiple sizes or colors, with the intent to return what doesn’t fit.
“Consumers don’t always know what size or color will work, so they order both,” said Doug Stephens, founder and CEO of Retail Prophet. “It’s understandable behavior.”
What drives someone to return an item instead of keeping it?
Stephens said part of the return surge may be tied to product quality.
“With brands like Temu and Shein, quality can certainly be an issue,” he told SAN. “You might order something that looks nothing like what you expected.”
At the same time, social media has changed how people view repeat outfits.
“If you’re a Gen Z or millennial going to several weddings a year, you don’t want to be seen in the same thing twice,” Stephens said. “It’s just become part of the culture.”
Why did retailers make returns so easy?
Retailers have helped create this conflict. Stephens said the “frictionless return” trend started roughly a decade ago when Amazon set new expectations for free, easy returns.
“Amazon raised the bar,” he told SAN. “The industry thought they’d have to scale back eventually — but that never happened.”
Since then, stores have scrambled to compete. Target gives customers up to a year to return store-brand items. Sephora lets shoppers return opened makeup within 30 days. And Costco accepts many returns within 90 days, no questions asked.
Sephora’s 30-day return policy is part of what makes American shoppers so fearless at the register. But outside the U.S., it’s a different story. In France and Singapore, Sephora customers have only 14 days to return items, and used beauty products aren’t typically accepted. The U.S. stands alone in how casually it treats post-purchase regret.
America’s lenient policies drive loyalty. But they come with a cost.
Why do stores keep such generous return policies?
Generous return policies are part of the business model for retailers like Costco.
“The average retailer runs on 40 to 50% margins, but Costco has super thin ones,” Stephens said. “Returns are really just a show of goodwill toward members — and that keeps renewals high.”
That strategy appears to work. Costco’s renewal rate in the U.S. and Canada hit 92.7% in 2025.
Luxury brands, however, are tightening up. Retailers like Max Mara only allow returns within 14 days, and L.L. Bean scaled back its lifetime warranty in 2018 after years of abuse (though they still accept returns within a year of purchase).
Still, others like Nordstrom lean on trust and accept returns on a case-by-case basis. The company’s policy states: “When we treat our customers fairly, they in turn are fair with us.”
Honestly, I get it. When I went to return my items (the lipstick from Sephora, a shirt from Target and a giant holiday inflatable from Costco), the process was almost too easy. I should also mention that I didn’t have a receipt for any of these returns because I always throw them away when cleaning out my purses.
Sephora only asked if I’d used the lipstick. Only once, I replied, but the color wasn’t right for me.
Target didn’t blink. And Costco didn’t even check the box to see whether the inflatable had survived the weekend — or if the right item was in the box.
It’s no wonder shoppers feel comfortable bringing almost anything back. Stores make it effortless.
Do free returns cost retailers money?
For all the convenience, returns have consequences.
“Retailers underestimate how costly the process really is,” Stephens told SAN. “They have to inspect every item, repackage it and decide if it can be resold. It’s incredibly time-consuming and expensive.”
Most returned items — especially makeup, clothing or anything opened — never make it back to shelves. Many are written off or resold at a steep discount. Some even end up in landfills. Past investigations found that major brands destroyed unsold or returned items rather than reselling them, citing logistical and brand-control concerns.
The German current affairs program “Frontal 21” found that H&M destroyed 100,000 unsold pieces of clothing. The New York Times alleged Nike slashed items in 2017, deeming them unwearable, before tossing them.
What happens to the items we return?
While returns can feel free to shoppers, they’re not. Every “try and return” purchase is factored into a retailer’s budget, which is often decided before the product even ships.
“The cost of those returns is just baked into the business,” Stephens said.
So whether it’s a lipstick you wore once or a Christmas inflatable that survived a muddy weekend, there’s a good chance it won’t see another customer. It’ll end up where many of our impulse buys do – quietly written off, boxed up or dumped.
The post The real reason stores let us return so much – even when it costs them appeared first on Straight Arrow News.
Ella Rae Greene, Editor In Chief
