Retail merchandise returns in 2023 totaled some $743 billion, accounting for 14.5% of total sales, according to a report published by the National Retail Federation and Appriss Retail.
The total included about $101 billion in fraudulent returns, which translates to a $13.70 loss for every $100 in returned merchandise, NRF noted.
The report indicated for every $1 billion in sales across the sector, retailers incurred $145 million in merchandise returns. The 17.6% return rate for digital sales, representing $247 billion of merchandise returned, exceeds the return rate for physical stores, at 10.02%, representing $371 billion excluding online orders returned in store.
As concerns around crime such as return fraud grows, many retailers are testing in-store policy changes and limiting the flexibility of online returns. Still, with customer satisfaction in mind, they are strengthening customer service operations through frictionless retail and a seamless end-to-end user experience.
During the past year, 49% of retailers stated they experienced returns of used, non-defective merchandise, also known as wardrobing, and 44% had dealt with the return of shoplifted or otherwise stolen merchandise. Some 37% of retailers maintained they experienced returns of merchandise purchased on fraudulent or stolen tender, and 20% asserted that they had experienced return fraud from organized retail crime groups.
Although the holiday season is a major time period for returns, retailers pointed out they only expect a slight uptick in the return rate compared with the rest of the year. The study suggested retailers anticipated $148 billion in returns, which is 15.4% of holiday sales. Retailers expect that to include about $25 billion in fraudulent returns, representing 16.5% of the holiday total. Given the holiday rush, according to NRF, fraudsters can exploit busy stores and harried workers to more easily make elicit returns.
“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’s Mark Mathews, executive director of research. “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.”
Appriss Retail CEO Michael Osborne added, “The continued growth of online channels has had a significant impact on retail sales and returns. One example is our tracking of claims and appeasements, which is a new category in online returns that covers reports for missed, late or damaged deliveries, and is the fastest-growing category for return fraud.”
Appriss Retail works with retailers to identify and mitigate theft, fraud and abuse.