December 14th 2022
Consumers are expected to return more than $816 billion worth of retail merchandise purchased in 2022, according to a report released today by the National Retail Federation and Appriss Retail. As retail sales continue to grow, the average rate of return has remained flat at 16.5% compared with 16.6% 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%) cited returns of used, non-defective merchandise, also known as wardrobing, and 41.4% cited the return of shoplifted or stolen merchandise. One-fifth (20%) 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% in 2021 to 16.5% 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%) 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%, 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% of merchandise returned, equating to nearly $171 billion. Because of the increased sales volume during this time of year, nearly 44% of survey respondents indicated they planned to hire more staff to handle returns during the holiday season. Of that, most (71%) intend to add staff specifically for stores.
NRF has forecast that total retail sales will grow between 6% and 8% to more than $4.86 trillion in 2022. Consistent with that analysis, the organization also expects holiday retail sales during November and December to grow between 6% and 8% over 2021 to more than $942.6 billion despite inflationary challenges.
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.
The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs – 52 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring and communicating the powerful impact retail has on local communities and global economies. nrf.com
About Appriss Retail Leveraging more than 20 years of data science expertise, Appriss Retail is transforming commerce interactions by providing real-time, actionable recommendations that reduce risk, drive efficiency, and maximize profitability. The company’s Software-as-a- Service (SaaS) solutions for behavior-based recommendations (BBR) and exception-based reporting (EBR) allow retailers to use machine learning and artificial intelligence to stop, modify, redirect or reward the actions of employees and consumers. Appriss Retail serves a global base of leading specialty, apparel, department store, hard goods, big box, grocery, pharmacy, and hospitality businesses in more than 180,000 physical and online locations in 45 countries across six continents. For more information about Appriss Retail visit: www.apprissretail.com.