Since the pandemic, picky high earners have been at the epicenter of a new cost headache for retailers: “buy now, return later.”
That’s the message from the Bank of America Institute, which reports that US retailers stared down a massive $890 billion tab from returns last year, according to the National Retail Federation. Return rates have more than doubled since 2019 among large retailers, with the associated costs rising even more:
More tidbits from BofA:
Department stores are taking the hardest hit, with a return rate in the high teens versus 4.5% for all US retailers.
Gen Z has the lowest return rate — unless it’s for electronics.
Higher-income shoppers are returning items at nearly twice the rate of lower-income households.
One explanation “may be that higher-income households are less cash-constrained and so are more likely to buy items speculatively when they are searching for a particular purchase, in the knowledge they can return it later if they decide it’s not right for them,” wrote Bank of America Institute economists led by David Michael Tinsley.
For shoppers, free returns have become the trade-off for hitting “buy,” but for retailers already squeezed by tariffs and soft demand, “buy now, return later” is proving to be an expensive habit to support.
