There will be a slight dip in the amount of retail returns in 2023, according to a report by Appriss Retail and the National Retail Federation released December 26.

Total returns in the retail industry are expected to reach $743 billion in 2023, down from $816 billion in 2022, as retailers test and implement new ways to minimize losses from returns while continuing to optimize the shopping experience for their customers. The report found that the total returns rate as a percentage of sales dropped from 16.4% to 14.5%.

However, the percentage of abuse and fraud impacting total returns continues to trend in the wrong direction, increasing from 10.2% to 13.7%, at a cost of some $101 billion, up from $85 billion in 2022.

“The continued growth of online channels has had a significant impact on retail sales and returns,” Appriss Retail CEO Michael Osborne said. 

Online sales do see a higher return rate, with 17.6% or $247 billion of merchandise purchased online returned. That compares with 10.02% for pure bricks-and-mortar returns (excluding online orders that are returned in-store), or $371 billion. 

“Retailers continue to test and implement new ways to minimize losses from returns, particularly those that are fraudulent, while at the same time optimizing the shopping experience for their customers,” said NRF executive director of research Mark Mathews. 

Among the types of return fraud retailers say they have experienced in the past year, nearly half (49%) cited returns of used, non-defective merchandise, also known as wardrobing, and 44% cited the return of shop-lifted or stolen merchandise. Over one-third (37%) said they experienced returns of merchandise purchased on fraudulent or stolen tender and one-fifth (20%) said they have experienced return fraud from organized retail crime groups.

While the holiday season is one of the biggest sales periods of the year for retailers, they only expect a slight uptick in the return rate compared with the rest of the year. The study finds that $148 billion in holiday merchandise is expected to be returned at a rate of 15.4%. However, retailers anticipate nearly $25 billion in fraudulent returns, which represent 16.5% of total holiday returns. The holiday season, with increased foot traffic, can be exploited by those seeking to make fraudulent returns. 

The 2023 Consumer Returns in the Retail Industry report was created using NRF retail survey data and Appriss Retail customer data.