Returns remain a significant challenge for US retailers, with total returns projected to reach $890bn in 2024, according to a report by the National Retail Federation (NRF) and Happy Returns.
Katherine Cullen, NRF Vice President of Industry and Consumer Insights, noted: “Returns play an important role within the retail ecosystem and offer an additional touchpoint for retailers to provide a positive interaction with their customers.”
For American shoppers, return policies are a key factor influencing where and how they shop. The report reveals that 76% of US consumers prioritise free returns when choosing retailers, while 67% say a poor return experience would prevent them from shopping with a brand again.
The demand for flexibility is also evident, with 84% of shoppers more likely to choose retailers offering no box/no label returns and immediate refunds.
Retailers are responding by prioritising upgrades to their returns processes. Sixty-eight per cent of surveyed businesses said they plan to enhance their returns capabilities within the next six months, recognising the critical role returns play in maintaining customer loyalty.
Fraud and abusive practices drive up costs
As retailers refine return processes, the financial burden of fraudulent and abusive practices continues to grow.
A striking 93% of retailers identified return fraud as a major issue, highlighting the strain it places on profitability. One particular challenge is “bracketing,” where shoppers purchase multiple items with the intention of returning some.
“Return policies are no longer just a post-purchase consideration – they’re shaping how younger generations shop from the start,” explained David Sobie, co-founder and CEO of Happy Returns. He pointed to innovative strategies to combat these issues:
“With behaviours like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics. Solutions like no box/no label returns with item verification enable immediate refunds, meeting customer expectations for convenience while increasing accuracy, reducing fraud and helping to protect profitability in a competitive market.”
Bracketing is particularly prevalent among Gen Z shoppers, with 51% admitting to the practice. As these trends evolve, US retailers face the challenge of managing consumer expectations while addressing the financial impact of return-related abuses.
Holiday returns intensify the challenge
In the US, the holiday season is especially taxing for retailers managing returns. The NRF predicts a 17% higher return rate during the 2024 winter holidays compared to the annual average.