US Retail Industry, Jobs, and State Economies Impacted by Nearly $369 Billion in Returns

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Appriss Retail recently released an analysis of the cost and ramifications of US consumer merchandise returns on retailers, jobs, and state economies. The “2018 Consumer Returns in the Retail Industry” report, which analyzes results from the National Retail Federation’s 2018 Organized Retail Crime survey, states that overall value of returned merchandise in the United States during the past year was almost $369 billion. This cost does not include the overhead a retailer incurs when receiving, sorting, and repackaging useable goods for resale. In addition, $18 billion to $24 billion of that sum were fraudulent returns.

Return rates vary greatly by retail vertical; for example, drug stores/pharmacies showed a 2.14 percent blended return rate while auto parts retailers had a rate of 22.58 percent. Most verticals are within two or three percentage points of the National Retail Federation’s published median of a 10 percent return rate. The report contains the blended return rate for 10 retail verticals.

“Today’s consumers expect to be able to change their minds after a purchase,” said Krishnan Sastry, president of Appriss Retail. “How a retailer responds to that shopper in the store has a lasting impact on its relationship with the consumer. Since a return is a lost sale it may not always be viewed as the customer service moment that it can be, especially for items purchased online and returned in the store. We hope that the report opens the door to further discussions about how retailers can improve their customer experience while reducing the associated losses.”

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Other highlights from the report include:

  • 38 percent of retailers report an increase in online purchases returned to brick-and-mortar stores.
  • In 2018, return fraud and abuse cost American workers between 607,400 and 789,600 jobs. In addition, return fraud and abuse cost states between $1.1 billion and $1.5 billion in lost sales tax. (A state-by-state breakdown is included in the report.)
  • For every $100.00 in returns, retailers lost $5.00 to return fraud throughout the year. At the holidays, that amount was estimated to increase to $6.50.

The full report is available for download here.

 

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