Retail Study Details Extent Of Returned Mechandise

Retailers are focused on mitigating returns after a report says the retail industry dealt with returns totaling $743 billion dollars in merchandise in 2023. That figure represents 14.5 percent of all sales.

According to the report from the National Retail Federation and Appriss Retail, for every $1 billion in sales, the average retailer incurs $145 million in merchandise returns. Online sales do see a higher return rate, with 17.6% or $247 billion of merchandise purchased online returned. That compares with 10.02% for pure bricks-and-mortar returns, or $371 billion.

This year, return fraud contributed $101 billion in overall losses for retailers. Moreover, for every $100 in returned merchandise, retailers will lose $13.70 to return fraud.

As concerns around return fraud continue to grow, retailers are bolstering their efforts to mitigate the related losses. With increases in both in-store and digital traffic, many retailers are testing in-store policy changes and limiting the flexibility of online returns. Keeping customer satisfaction in mind, retailers are strengthening customer service operations through frictionless retail and a seamless end-to-end user experience.

Among the types of return fraud retailers say they have experienced in the past year, nearly half (49%) cited returns of used, non-defective merchandise, also known as wardrobing, and 44% cited the return of shoplifted or stolen merchandise. Over one-third (37%) said they experienced returns of merchandise purchased on fraudulent or stolen tender and one-fifth (20%) said they have experienced return fraud from organized retail crime groups.

While the holiday season is one of the biggest sales periods of the year for retailers, they only expect a slight uptick in the return rate compared with the rest of the year. The study finds that $148 billion in holiday merchandise is expected to be returned at a rate of 15.4%. However, retailers anticipate nearly $25 billion in fraudulent returns, which represent 16.5% of total holiday returns. The holiday season, with increased foot traffic, can be exploited by those seeking to make fraudulent returns.