Returns totaled $743 billion in 2023, amounting to 14.5% of all retail sales, according to a report from the National Retail Federation and Appriss Retail. This means that for every $1 billion in sales, the average retailer incurred $145 million in merchandise returns.
As is typically the case, online sales saw a higher return rate in 2023 at 17.6% compared to 10.02% for pure brick-and-mortar returns (excluding online orders that were returned in-store).
For this year’s report, in an effort to provide greater granularity, NRF paired the responses from its annual survey with the returns data of Appriss Retail’s customers, which include 60 of the top 100 retailers in the U.S. Because of this change in methodology, 2023 numbers cannot be compared to NRF’s 2022 returns report, where returns were measured at 16.5% of all retail sales and totaling nearly $817 billion.
“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 Mark Mathews, NRF’s Executive Director of Research in a statement. “Retailers’ 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.”
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The 2023 numbers were released on Dec. 22, but NRF noted that retailers expect only a slight uptick in the return rate through the end of the year compared with the rest of 2023. The study found that $148 billion in holiday merchandise is expected to be returned at a rate of 15.4%. Of that, retailers anticipate nearly $25 billion will be fraudulent returns, representing 16.5% of total holiday returns.
Wardrobing, Shoplifting Account for Highest Levels of Returns Fraud
For the full year, return fraud contributed $101 billion in overall losses for retailers, meaning that for every $100 in returned merchandise, retailers will lose approximately $13.70 to return fraud. With increases in both in-store and digital traffic, NRF noted that many retailers are testing in-store policy changes and limiting the flexibility of online returns to combat this fraud while also aiming to maintain customer satisfaction by strengthening service levels through things like frictionless and seamless end-to-end experiences.
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.
“The continued growth of online channels has had a significant impact on retail sales and returns,” said Michael Osborne, CEO of Appriss Retail in a statement. “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.”
