It used to be that when stores closed on Christmas Eve, retailers could breathe a sigh of relief. The business was done and it was time to take a break.No longer.In recent years, the run up to Christmas is more of a warm up act, with the real action taking place in the weeks after when we head into ‘Returns Season’.Between e-commerce, more liberal refund and exchange policies at stores, and a consumer sentiment that views holiday presents as commodities rather than a heartfelt offering from a friend or family member to be cherished.In this most unusual year, will things be different? Most analysts are thinking that this is one trend that is likely to be similar to last year.With the move to shopping online this year, apparel and footwear are likely to see even higher levels of returns, based on size, color and fit. However other categories are not exempt.Round Trip BookingIn both the UK and the US, apparel return rates can reach 44 percent of sales. In Germany, return rates hover around 55 percent, the highest in the EU, according to PostNord data. Online retailer Zalando said that about half of its sales end up being returned. Thirty-four percent of Americans will return gifts they received over the holiday season, a study from personal finance site Yahoo Finance has found. Out of those people, 68% of them said that they plan to return clothing and 23% will return electronics.In the UK, return rates have doubled since 2014, when return rates averaged 14% of sales. By 2019 it was an average of 25%, according to IMRG research.As online ordering grows, the volume of items shipped out continues to rise. But then so does the volume of returns. With e-commerce having higher return rates than physical retail, the amount returned items will continue to increase - to the detriment of retailers. It is not unreasonable to see a scenario where e-commerce costs vastly outstrip revenue so that the most successful online sellers end being the biggest losers, in terms of profitability.Plan and PrepareKnowing the risks and costs, retailers now need to focus on ways to reduce both the costs of handling returns and the level of returns to begin with.With holiday eCommerce return rates hovering around 30%, merchants should consider the returns process when building both their selling and operational strategies, according to Ware2Go, a division of UPS. In the U.S., for example, as much as $70.5 billion worth of holiday purchases this year are expected to be returned, real estate firm CBRE predicts. In a survey by Ware2Go, 61% of respondents say an online merchant’s return policy is very important to their decision to make a purchase, and another 34% say it’s somewhat important. Only 6% are indifferent.As much as 400 million square feet of additional warehouse space could be needed in the U.S. in the next five years just to process returns, CBRE said.A Double-Edged SwordWhile returns can be a huge burden for retailers, the ability to return merchandise is practically non-negotiable with consumers. And this doesn’t only apply to e-commerce.Liberal return policies, coupled with free-shipping - and more often free returns - has become an expectation for most consumers.According to research from Accenture, 74% of UK consumers are ‘put off by having to pay for returns.’. Even in physical stores, consumers expect longer grace periods for returning merchandise.Over 69% of shoppers said that the quality of return services strongly influences the retailers they will buy from, according to an IMRG Consumer Delivery Review.And, 75% of consumers said returns are an essential factor in where they choose to shop, according to research done by payment platform Klarna.This has led more retailers to look at their physical stores with renewed respect. It’s also part of what is prompting e-commerce pure plays to add a bricks and mortar channel.While returns are never an optimal outcome, with bricks and mortar there are no shipping fees. Restocking is far easier and less costly. Plus, when the customer comes into the store to make a return, there is a strong chance that they will buy something else. So returns are not necessarily a total loss.For a growing number of retailers during the pandemic, ‘click and collect’ and ‘Buy Online, Return In Store’ (BORIS) were championed out of necessity. Post pandemic, will consumers still find that attractive? Or will they expect door-to-door service?Either way, shipping - with all of its costs and logistical challenges - is set to be a growing challenge that will need C-suite attention.