To view your Retail Orders list, go to Operations > Retail Orders:
Click a customer's name to access their order history:
All of the order's notes are shown in the Order History section (#1). Click "Edit order" to make changes and refund (#2).
Change quantity for each line item (#1) to see a preview of the changes in subtotal (#2), new total that is due (#3), refund amount, and note that will be placed on the order history (#4)
Clicking "Process Change" will take you to confirmation screen
Click "Yes" to process order edit and refund. Item status will now show as "Cancelled" in the fulfillment center.
The refund amount will also show in the Payment > Payment History section of your account!