New research from Appriss Retail revealed that total merchandise returns for 2024 totaled $685 billion, which represents a whopping 13.2 percent of total retail sales — which is pegged to come in at $5.19 trillion.
The good news is that the rate of returns is down from 14.5 percent in 2023.
The report was based on data from more than 60 U.S. retailers and the U.S. Census Bureau as well as a survey of 50 retail leaders and 1,000 consumers. The report, titled, the “2024 Consumer Returns in the Retail Industry Report,” was done in collaboration with Deloitte.
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Appriss Retail is a provider of data and analytics solutions aimed at reducing retail losses and combating return and claim fraud. The company said it supports one-third of all U.S. omnichannel sales across 150,000 retail locations along with serving 60 of the top 100 U.S. retailers.
The report also showed that fraudulent returns and claims resulted in a $103 billion loss for retailers, “with 15.14 percent of all returns deemed fraudulent, meaning a customer attempted to return an item to a retailer for a refund, knowing the item did not qualify for a refund according to the store’s policy,” authors of the report said.
Some of the key findings include that 60 percent of retailers polled “reported incidents of ‘wardrobing,’ or the act of consumers buying an item, using the merchandise, and then returning it,” the report’s authors said adding that 55 percent of retail respondents “cited cases of returning an item obtained through fraudulent or stolen tender, such as stolen credit cards, counterfeit bills, gift cards obtained through fraudulent means or fraudulent checks.”
The poll also found that 48 percent of retailers surveyed “faced occurrences of returning stolen merchandise.”
Michael Osborne, chief executive officer Appriss Retail, said, “It’s clear why retailers want to limit bad actors that exhibit fraudulent and abusive returns behavior, but the reality is that they are finding stricter returns policies are not reducing the returns fraud they face. Our annual research highlights the serious problem of returns fraud, and why an AI-powered, data-driven approach to loss prevention can reduce fraud and keep consumers loyal.”
Kevin Mahoney, managing director of the retail practice at Deloitte Consulting LLP, said returns are a significant cost for retailers, “and the rise of online shopping could increase this trend. As retailers implement policies to address this issue, they should avoid negatively affecting customer loyalty and retention. Effective policies should reduce losses for the retailer while minimally impacting the customer experience. This approach can be crucial for long-term success.”