Consumers are expected to return more than $816 billion worth of retail merchandise purchased in 2022, up from $761 billion last year, according to a report released on Wednesday by the National Retail Federation (NRF) 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, NRF said. And for every $1 billion in sales, the average retailer incurs $165 million in merchandise returns.
“Even with 29 continuous months of retail sales growth, consumers have remained steady with the overall rate of merchandise returned to retailers this year,” Mark Mathews, NRF’s VP of research development and industry analysis, said in a statement. “While oftentimes returns represent a lost sale for a retail establishment, returns can also provide recourse through positive customer engagement and, potentially, another purchase.”
In the same report, the NRF said 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 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, NRF reported.
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.
Additionally, 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,” Steve Prebble, CEO of Appriss Retail, added. “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.