What's Happening?
The National Retail Federation (NRF) has released a forecast indicating that the return rate for retail products in 2025 will be 15.8%, amounting to $849.9 billion. This represents a slight decrease from the 2024 return rate of 16.9%, which equated to $890
billion in returned sales. The report, created in partnership with Happy Returns, highlights that 17% of holiday sales are expected to be returned, consistent with previous years. Ecommerce purchases continue to have higher return rates, with an estimated 19.3% of online sales expected to be returned. The report is based on surveys from 2,006 consumers and 358 ecommerce professionals from large U.S. merchants.
Why It's Important?
Returns are a significant challenge for retailers, impacting profitability and customer satisfaction. The NRF report underscores the importance of a seamless returns process, as 71% of consumers are less likely to shop at retailers where they have had poor returns experiences. Additionally, 80% of consumers would share negative experiences with friends and family, amplifying the impact. Retailers are increasingly using AI to tackle returns fraud, which accounts for 9% of all returns. The report suggests that modernizing reverse logistics is crucial for retailers to enhance customer satisfaction and reduce fraud.
What's Next?
Retailers are expected to continue evolving their returns processes to meet customer expectations and reduce fraud. The use of AI in detecting fraudulent returns is likely to increase, as retailers seek to safeguard their operations in a competitive retail landscape. The focus will be on creating positive customer experiences to foster brand loyalty and mitigate the negative impacts of high return rates.
Beyond the Headlines
The report highlights ethical concerns surrounding consumer behavior, with 45% of consumers believing it is acceptable to 'bend the truth' when making returns. This behavior, along with practices like 'wardrobing' and 'bracketing,' poses challenges for retailers in managing returns effectively. The strategic importance of returns policies is emphasized, as they influence consumer shopping decisions from the outset.
