Dive Brief:
- Now that the 2021 holiday shopping season is complete, retailers expect customers to return more than $761 billion in merchandise sold last year, according to a new report from the National Retail Federation and Appriss Retail. That’s 16.6% of total U.S. retail sales, which rose to $4.58 trillion last year.
- The 2021 return rate is an increase from 10.6% in 2020. Of the $1.05 trillion in online sales last year, shoppers returned about $218 billion in online purchases, $23.2 billion of which were fraudulent, according to the NRF’s findings.
- Among the categories with the highest return rates were clothing (12.2%), and home improvement and home goods (both 11.5%). The most common original payment methods that led to returns were credit cards (22.78%), cash (12.69%) and debit cards (7.04%), per the report.
Dive Insight:
Before the NRF’s report, other research predicted billions in holiday returns alone. CBRE and Optoro in December estimated that shoppers would return at least $66.7 billion in holiday merchandise to retailers. A RetailMeNot survey late last year found that 38% of respondents anticipated returning gifts in 2022.
“As total retail sales continue to accelerate from sustained consumer demand during the pandemic, it is no surprise that the overall rate of returns has also been impacted,” Mark Mathews, NRF’s vice president of research development and industry analysis, said in a statement. “While retailers have indicated that they are seeing an increase in items returned to stores and online, the upside is that it also provides them with additional opportunities to connect further with customers and provide a positive experience.”
But with the estimated rise in returns comes extra work for logistics companies and higher costs for retailers. The CBRE and Optoro report noted that the cost of returns has jumped since 2020, with electronics like laptops, tablets and cell phones having the highest reverse logistics cost per item. Earlier this month, UPS said it expects to manage more than 60 million return packages from Nov. 14 through Jan. 22, a 10% bump from last year and an all-time high. For many retailers, an influx of returns means liquidating or discarding returned merchandise, adding more junk to landfills and costing retailers merchandise.
