Some stores are charging for holiday gift returns: See the list

Retailers are increasingly charging for mail returns to offset shipping costs and deter abuse: 72% of merchants now charge for at least one mail-return option (up from 66% in 2024), according to the National Retail Federation's 2025 Retail Returns Landscape. The report projects total retail returns of $849.9 billion in 2025, with 19.3% of online sales returned and 9% of returns classified as fraudulent; major chains listing specific fees include Macy’s ($9.99 for non‑Stars members), T.J. Maxx/Marshalls ($11.99), JCPenney ($8 or 15% on electronics), and Best Buy (up to $45 for activatable devices and 15% for many specialty electronics). These policy changes could modestly improve retailer margins and alter consumer shopping/return behavior, but are unlikely to be material near-term market movers.

Analysis

Market structure: Charging return fees transfers a slice of reverse-logistics cost back to consumers, benefiting retailers with strong loyalty programs and high-margin assortments (M, AEO, URBN) and hurting commoditized, high-return categories (consumer electronics / BBY). With industry returns forecast at $849.9bn and ~19.3% online return rates, per-return fees in the $4–$12 range can materially add tens-to-low‑hundreds of basis points to margins for mid-size retailers within 1–4 quarters if adoption persists.

Risk assessment: Tail risks include regulatory action (state AG or FTC inquiries) within 30–90 days that could ban or cap fees, and consumer backlash lowering conversion rates by >100–200 bps in affected cohorts. Operational second-order effects: reduced reverse‑logistics volume pressures third‑party processors but also lowers fraud losses (9% fraud rate cited), changing cost pools over 1–3 quarters; labor/strike or shipping disruptions could reverse benefits.

Trade implications: Favor names that monetize returns while driving loyalty (overweight M, AEO, URBN) and reduce exposure to BBY and pure-play electronics sellers near term (weeks–months). Implement relative-value and options plays: pair long AEO/URBN vs short ANF/BBY, and use short-dated put spreads to express downside in BBY around holiday return windows.

Contrarian view: The market may underprice the loyalty-conversion upside — fees will accelerate paid-membership growth and reduce fraud, supporting sustainable margin expansion over 2–4 quarters. Conversely, the overreaction risk is real: if regulators force rollbacks, names that prematurely trimmed prices or inventory could face excess clearance, producing a 5–15% downside in 1 quarter.

Key Decisions for Investors

• Establish a 2–3% long position in Macy’s (M) over the next 2–6 months to capture membership conversion and ~50–150 bps margin tailwinds from the $9.99 non‑member return fee; target 8–12% upside, stop-loss 8%.
• Initiate a pair trade: long 2% AEO (American Eagle) / short 1.5% ANF (Abercrombie) sized to portfolio risk — horizon 3–6 months; rationale: brand/loyalty resilience at AEO vs thinner margins and traffic risk at ANF as return fees depress discretionary spend.