Are Retailers Getting Returns Under Control?

A study finds 69 percent of retailers treat returns as a cost of doing business, with only 19 percent having a strategic returns program in place.

The study from Incisiv found most retailers lack clearly defined metrics to measure their returns performance. Retailers are also failing to leverage tech solutions that could reduce returns, such as providing feedback on attributes like size and fit or improving customer satisfaction with the returns process, by enabling shoppers to schedule return pickup or track return/refund status.

On a more positive read, Insider Intelligence sees growth in returns moderating on the heels of spikes in 2020 and 2021 that resulted from pandemic-fueled online shopping and liberal return policies. Online return rates are seen sliding to 19.3 percent of sales last year from 21.7 percent in 2021, then 18.2 percent this year and 14.7 percent by 2026.

“This is partly due to people returning to stores to shop,” said Wendy Louie-Lam, forecasting analyst at Insider Intelligence, in a statement. “The other reason is retailers are implementing new policies or AI tech to minimize returns. Many online apparel retailers have implemented or are planning to implement new AI technology that should help with sizing to eliminate bracketing (people buying more than one size). Also, some online retailers are charging for returns.”

The National Retail Federation’s “2022 Consumer Returns in the Retail Industry” report found online return rates decreased over the last year and are now on par with in-store return rates. NRF’s study, however, still found overall return rates at retail remained sharply elevated in 2022 compared to 2020 due to quick rollouts of omnichannel practices such as BORIS and BOPIS, as well as return fraud.

In a recent blog entry, David Johnston, NRF’s VP, asset protection and retail operations, suggested collecting data to understand why returns are happening, collaborating with vendors, studying how returns impact sustainability efforts and exploring stricter return policies.

“Returns should not be viewed as a total loss,” wrote Mr. Johnston. “A shift in mindset can present opportunities to decrease return rates and loss by leveraging data, increasing communication with manufacturers and thinking about sustainability.”

• Incisiv Releases 2023 Omnichannel Returns Index With Best Practices for Stronger Returns Management - Incisiv/BusinessWire

• Insider Intelligence forecasts 2023 retail returns to increase 2% year-over-year to US$627.3B - Insider Intelligence

• Shifting the mindset around retail returns – National Retail Federation

• 2022 Retail Returns Rate Remains Flat at $816 Billion - National Retail Federation

• $428 Billion in Merchandise Returned in 2020 - National Retail Federation