New research from Appriss Retail revealed that total merchandise revenues for 2024 totaled $685 billion, representing a whopping 13.2 percent of total retail sales – which are expected to reach $5.19 trillion.
The good news is that returns have fallen from 14.5 percent in 2023.
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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 ‘2024 Consumer Returns in the Retail Industry Report’, was prepared in collaboration with Deloitte.
Appriss Retail is a provider of data and analytics solutions aimed at reducing retail losses and combating returns and claims fraud. The company said it powers one-third of all U.S. omnichannel sales across 150,000 retail locations and serves 60 of the 100 largest U.S. retailers.
The report also showed that fraudulent returns and claims resulted in $103 billion in losses for retailers, “with 15.14 percent of all returns considered fraudulent, meaning a customer attempted to return an item to a retailer for a refund , knowing that the item was not eligible for a refund under the store’s policy,” the report’s authors said.
Some of the key findings include that 60 percent of retailers surveyed “reported incidents of ‘wardrobe shopping,’ or the act of consumers purchasing an item, using the merchandise and then returning it,” the report’s authors said, adding that 55 percent of retail respondents “cited instances of returning an item obtained through fraudulent or stolen payment instruments, such as stolen credit cards, counterfeit banknotes, gift cards obtained fraudulently or fraudulent checks.”
The poll also found that 48 percent of retailers surveyed “experienced the return of stolen goods.”
Michael Osborne, CEO of Appriss Retail, said: “It is clear why retailers want to limit bad actors who engage in fraudulent and unlawful returns behavior, but the reality is that they are finding that stricter returns policies do not reduce 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 expense for retailers, “and the rise of online shopping could amplify this trend. As retailers implement policies to address this issue, they must avoid negatively impacting 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.”