America’s retailers are heading into one of the busiest and least profitable stretches of the shopping calendar: the rush of post-Christmas returns. After a holiday season that the National Retail Federation forecast would break the $1 trillion mark for the first time, the industry is now bracing for a flood of merchandise moving in the opposite direction. Using the NRF’s 2025 holiday sales forecast and the return expectations retailers shared in a separate returns study, the value of post-Christmas returns could top $173 billion. That figure helps explain why the days after Dec. 25 are not just a customer service challenge, but a margin test for stores, brands, warehouses, and shipping networks across the country.
By the numbers
How the $173 billion estimate comes together
The estimate starts with the National Retail Federation’s 2025 holiday forecast, which projected that U.S. retail sales in November and December would total between $1.01 trillion and $1.02 trillion. That would put the season above the trillion-dollar mark for the first time, a milestone the group said would follow 2024 holiday sales of $976.1 billion. Separately, the NRF and Happy Returns 2025 Retail Returns Landscape report said retailers expected 17% of holiday sales to be returned. Apply that rate to the top end of the sales forecast and the result is about $173.4 billion in returned merchandise. Even the low end of the forecast produces a figure above $171 billion. That does not mean retailers have already booked exactly $173 billion in returns. It means the industry entered the post-Christmas window with a return wave of that size well within range. Framed that way, the headline holds up, and it also helps explain why chains spend so much time adjusting return policies, staffing service desks, and preparing reverse logistics systems before the season even ends.
Why returns hurt more than a lost sale
A returned item does not simply erase revenue. It sets off a second round of costs. Retailers have to receive the item, inspect it, determine whether it can be resold, repackage it if needed, and move it back into inventory or into a liquidation channel. For goods that come back opened, damaged, out of season, or too costly to process, the recovery value can fall fast. The returns problem is especially painful online. The same 2025 NRF returns research found that an estimated 19.3% of online sales would be returned this year, well above many in-store categories. That gap matters after Christmas, when shoppers are more likely to send back clothing that does not fit, duplicate gifts, or electronics that were bought without knowing the recipient’s exact preferences. Returns also create awkward tradeoffs for retailers. Tighter policies can protect margins, but they can also irritate shoppers who now treat easy returns as part of the purchase. That is one reason many brands have moved toward a more targeted approach, making in-store returns easier, offering exchanges before refunds, or giving loyalty members more generous terms than occasional customers.
Why the post-holiday rush is a logistics problem
The size of the return wave matters because it hits all at once. Warehouses that have just spent weeks shipping gifts now have to process goods coming back. Customer service teams move from helping shoppers place orders to handling refund questions, return labels, and exchange requests. Store employees who just worked through the selling season are suddenly dealing with long return lines and reshelving decisions. Retailers told NRF they were preparing for that surge by leaning more heavily on third-party logistics providers, adding seasonal labor dedicated to returns, and extending return windows in some cases. Those tactics can spread out the pressure, but they do not remove it. They simply make the traffic jam a little more manageable. Some companies are also pushing customers toward lower-cost channels. In-store returns give retailers a better chance of turning a refund into an exchange or another purchase. Third-party return bars and consolidated drop-off networks can reduce shipping and handling costs compared with individual mailed-back packages. For chains with big footprints, the returns counter has effectively become another profit-defense tool.
The environmental cost does not disappear at the service desk
There is also a waste problem hiding inside the returns problem. An Associated Press report on holiday returns noted that returned items can raise a product’s environmental footprint by roughly 25% to 30% because of extra transportation, packaging, sorting, and handling. The same report said many returned goods never make it back to another consumer, particularly when resale economics do not work in the seller’s favor. That reality is one reason the industry has become more interested in refurbishment, resale, and off-price channels. A product that can be cleaned up and sold again is far more valuable than one that sits too long in a returns center or gets written down into a low-value liquidation stream. The environmental argument and the margin argument often point in the same direction: get returned goods sorted and back into circulation faster. For shoppers, though, convenience still wins most of the time. Free returns remain a competitive weapon, and habits like ordering multiple sizes with the intention of sending some back are still common in apparel. As long as that behavior remains normal, retailers will keep paying to solve a problem their own policies helped create.
A record holiday season comes with a record aftershock
The trillion-dollar holiday sales forecast made for an upbeat retail headline. The returns estimate is the less glamorous follow-up, but it may say more about the industry’s real operating pressures. A strong selling season looks different once billions of dollars in merchandise start flowing back through counters, kiosks, trucks, and warehouse docks. That is why returns are no longer just a back-office nuisance. They are a strategic issue that touches staffing, logistics, customer loyalty, sustainability, and first-quarter profitability. With holiday spending at historic levels and e-commerce still carrying elevated return rates, the post-Christmas rush is becoming a bigger test of execution every year. If the holiday return rate holds near 17%, the math is clear enough. Retailers may have crossed a symbolic sales threshold in 2025, but they are also staring down a post-Christmas returns wave worth more than $170 billion. For an industry that spends the holiday season chasing growth, that is the bill that comes due right after the gifts are opened.
Vince Coyner is a serial entrepreneur with an MBA from Florida State. Business, finance and entrepreneurship have never been far from his mind, from starting a financial education program for middle and high school students twenty years ago to writing about American business titans more recently. Beyond business he writes about politics, culture and history.
