Consumers are expected to return more than $816 billion worth of retail merchandise purchased in 2022, according to a report released by the National Retail Federation and Appriss Retail. As retail sales grow, the average rate of return has remained flat at 16.5 percent compared with 16.6 percent in 2021.
“Even with 29 continuous months of retail sales growth, consumers have remained steady with the overall rate of merchandise returned to retailers this year,” said Mark Mathews, NRF’s vice president of research development and industry analysis. “While oftentimes returns represent a lost sale for a retail establishment, returns can also provide recourse through positive customer engagement and, potentially, another purchase.”
According to the retail survey, for every $1 billion in sales, the average retailer incurs $165 million in merchandise returns. Additionally, it found that for every $100 in returned merchandise accepted, retailers lose $10.40 to return fraud.
Of the types of return fraud retailers say they have experienced in the past year, half (50 percent) cited returns of used, non-defective merchandise, also known as wardrobing, and 41.4 percent cited the return of shoplifted or stolen merchandise. One-fifth (20 percent) attributed return fraud to organized retail crime.
For the first time since online data has been captured as part of the survey in 2019, online return rates are consistent with the overall rate of return. Online return rates decreased from 20.8 percent in 2021 to 16.5 percent in 2022. Online sales will account for approximately $1.29 trillion of total U.S. retail sales in 2022. Of the approximately $212 billion of returned online purchases, $22.8 billion (10.7 percent) will be deemed fraudulent.
Of the more than $3.66 trillion in expected in-store sales, $603 billion will be returned. Approximately $62.1 billion of those returns, or 10.3 percent, are expected to be fraudulent.
“The holidays typically include a spike in retail activity, but higher return rates can also impact profitability,” said Steve Prebble, CEO of Appriss Retail. “Retailers must look for ways to individualize the returns process through data-driven insights. This will minimize the risk of accepting fraudulent returns while enhancing the customer experience for loyal shoppers.”
In terms of holiday sales, retailers can expect to see an average of 17.9 percent of merchandise returned, equating to nearly $171 billion. Because of the increased sales volume during this time of year, nearly 44 percent of survey respondents indicated they planned to hire more staff to handle returns during the holiday season. Of that, most (71 percent) intend to add staff specifically for stores.
The survey of 70 retailers was conducted by NRF and Appriss Retail from Sept. 19 through Oct. 14, 2022. Click here to view the survey results.