The retail industry continues to face significant challenges when it comes to returns, as indicated by the latest findings from the National Retail Federation and Appriss Retail. Total returns reached $743 billion in merchandise for 2023, marking a substantial 14.5% return rate compared to total sales.
On average, retailers incurred $145 million in returns for every $1 billion in sales. Online purchases presented a higher return rate of 17.6%, totaling $247 billion.
Retailers are actively working to minimize their losses from returns, and fraud prevention is becoming a focal point of focus for them. Return fraud posed a substantial threat, according to NRF and Appriss Retail, which found that it contributed $101 billion in losses for retailers, translating to a loss of $13.70 for every $100 in returned merchandise. As a result, retailers are adapting policies for both their in-store and online returns strategies to help combat this issue.
Growth Of Digital Has Impacted Returns
The growth of online channels over the past few years has significantly impacted return trends, particularly a noticeable rise in claims and appeasements related to missed, delayed, or damaged deliveries.
Although the holiday season experienced a boost in sales amid inflation, retailers are anticipating a marginal uptick in returns, estimating $148 billion in holiday merchandise returns. They’re also expecting $25 billion in fraudulent returns and are bracing for potential fraudulent activities during this busy period.
“Retailers continue to test and implement new ways to minimize losses from returns, particularly those that are fraudulent, while at the same time optimizing the shopping experience for their customers,” said NRF Executive Director of Research Mark Mathews in a prepared statement. “Retailer’s efforts include providing greater detailed descriptions on sizing and fit of products for online purchases and requiring a receipt with returned items. As a whole, the industry is prioritizing efforts to reduce the amount of merchandise returned in stores and online.”