As 2025 closes and 2026 begins, retail returns are no longer a background issue or a short-lived inconvenience. They are a predictable operational phase - one that tests warehouse flow, labor planning, inventory recovery, and customer experience all at once. 

This is the aftershock. And how retailers prepare for it determines whether returns become a margin drain or a strategic advantage. 

Returns are no longer seasonal - they’re structural 

For years, returns were treated as a temporary surge that operations would “push through” after peak. That approach no longer works. 

Extended return windows, ecommerce growth, and omnichannel buying behaviors mean returns now arrive earlier, last longer, and hit harder. Many retailers experience elevated returns volume well into January and February, with overlapping waves rather than a single spike. 

By early 2026, returns are no longer a seasonal anomaly. They are a permanent feature of modern retail operations, and they require the same level of planning as outbound peak. 

Why retail returns are increasing heading into 2026 

Several forces are converging at once, amplifying the returns challenge: 

• Ecommerce continues to drive higher return rates, especially in categories like apparel, footwear, and home goods 

• Flexible and extended return policies are now table stakes for conversion 

• Promotional compression (earlier and deeper discounts) pulls demand forward but pushes returns into Q1 

• Inventory sensitivity is higher, making slow recovery more costly than ever 

In 2025, U.S. retail returns are projected to approach $850 billion, representing roughly 15–16% of total retail sales, with ecommerce return rates often nearing 20–30% in categories like apparel and footwear. Pet supplies and fitness wear saw especially high ecommerce growth in 2025 - with pet ecommerce accounting for over half of U.S. pet product sales, and the global fitness apparel sector valued near $300 billion - further amplifying online-driven return activity heading into 2026. 

That scale makes returns an operational issue, not just a policy decision. 

What actually happens in warehouses when returns surge 

When returns spike in early January, the disruption isn’t just about volume. 

It’s about flow. 

Returns arrive unexpectedly at docks designed for outbound freight. Storage planned for forward inventory fills with ungraded product. Labor is pulled from fulfillment to triage returns. Systems lag behind physical reality. 

Instead of transitioning cleanly out of peak, many warehouses experience weeks of instability as inbound returns compete with outbound demand. 

Returns don’t just add work - they interrupt velocity. 

The hidden cost of slow reverse logistics 

Returns don’t hurt because they exist. They hurt when they move slowly. 

When returned inventory sits waiting for inspection, grading, or disposition, retailers lose value every day: 

• Resalable items miss replenishment windows 

• Seasonal goods age into markdown territory 

• Labor and space are consumed without progress 

• Finance loses visibility into recoverable inventory 

By early 2026, the most successful retailers won’t be the ones with the lowest return rates. They’ll be the ones that process, decide, and recover inventory fastest. 

Speed is the differentiator. 

Reverse logistics is becoming a network design problem 

Historically, returns were something warehouses absorbed. 

Now, they’re something networks must design around. 

Retailers are increasingly asking: 

• Which facilities should handle returns vs. outbound fulfillment? 

• Should grading and resale happen in the same building? 

• When does shared or multi-client warehousing make sense? 

• How do we prevent returns from destabilizing service levels? 

In 2026, reverse logistics is no longer a back-office function. It’s a core component of warehouse and network strategy. 

What “good” looks like for early-2026 returns operations 

Retailers that manage the post-holiday aftershock well tend to share a few traits: 

1. Returns are forecasted, not reacted to

• Dedicated space planned in advance 

• Labor flex built into Q1 staffing models 

• Inbound schedules aligned to expected return waves 

2. Reverse logistics is flow-based, not batch-based 

• Fast inspection and grading 

• Early disposition decisions 

• Resalable inventory reintroduced quickly 

3. Returns don’t compete with outbound fulfillment 

• Separate zones or facilities 

• Overflow or multi-client warehousing during peak return weeks 

• Clear operational ownership 

Returns stop being a disruption when they’re treated as their own flow. 

Why returns and customer experience are now inseparable 

Customers don’t judge returns by policy language. 

They judge them by speed and clarity. 

Slow refunds, delayed exchanges, and inventory stuck “in limbo” directly impact trust and repeat purchase behavior. Studies consistently show that poor return experiences dramatically reduce the likelihood of customers buying again. 

By 2026, operational efficiency in reverse logistics will be a brand experience lever, not just 

What retailers should expect from returns in 2026 

Looking ahead, several trends are shaping how returns will be handled: 

• Greater investment in reverse logistics infrastructure 

• Increased use of regional or secondary facilities for returns processing 

• More focus on inventory recovery speed, not just cost 

• Stronger integration between returns, planning, and finance 

• Growing pressure to meet sustainability and compliance goals in returns handling 

Returns are no longer just about getting product back. They’re about recovering value quickly and predictably. 

Frequently asked questions about retail returns & reverse logistics 

What is reverse logistics in retail? 

Reverse logistics is the process of moving returned products from customers back through the supply chain for inspection, grading, resale, refurbishment, recycling, or disposal. 

When do retail returns peak? 

Retail returns typically peak in January and early February, following the holiday season. Extended return windows now create multiple waves rather than a single surge. 

Why are ecommerce returns higher than in-store? 

Ecommerce returns are higher due to fit issues, expectation mismatches, and the ease of returning online purchases. Online return rates often range from 20–30%, depending on category. 

What is the biggest challenge in reverse logistics? 

The biggest challenge is decision latency - delays in grading, disposition, and system updates that cause inventory to sit idle and lose value. 

How do returns affect warehouse operations? 

Returns consume dock space, storage, and labor, often disrupting outbound fulfillment if not planned separately. Without dedicated processes, returns can destabilize warehouse flow for weeks. 

How can retailers reduce the cost of returns? 

Retailers reduce return costs by: 

• Planning returns in advance 

• Separating reverse and forward flows 

• Speeding up grading and disposition 

• Using flexible or shared warehousing during peak return periods 

Why are returns a bigger issue in 2026 than before? 

Returns volumes are higher, margins are tighter, and customer expectations around speed are greater. Slow recovery now has a much larger financial and reputational impact. 

The aftershock is predictable, the impact isn’t 

Returns are no longer a surprise, they’re a guaranteed phase of the retail calendar. 

Retailers that succeed in early 2026 will be the ones who: 

• Design for returns, not around them 

• Protect warehouse flow when volume shifts 

• Treat reverse logistics as a strategic capability 

If you’re looking for a partner that can manage holiday and post-holiday surges – including “Christmas in July” – contact our team below.