More purchases totaling more money are returned in January than any other month of the year, giving the month the new name of Returnuary. It’s not exactly something most retailers are looking forward to...nor the suppliers who ultimately end up taking much of the responsibility for dealing with the financial repercussions.
And those repercussions are huge. Experts are predicting that when everything is totaled up for 2024, returns to retailers will amount to nearly $890 billion, an all-time record and an incredible 13.2 percent of total retail sales. But it’s also a record that may not stand for very long. Retailers are saying they expect the return rate for this January to be 17 percent higher, on average, than in the past. Still the rate of return is off from 2023’s 14.5 percent according to Appriss Retail, a consultant that specializes in return issues.
To make matters worse, Appriss says that “15.1 percent of all returns (are) deemed fraudulent, meaning a customer attempted to return an item to a retailer for a refund, knowing the item did not qualify for a refund according to the store’s policy.”
Aside from the financial, logistics and operational issues raised by these staggering return rates, the environmental side is also a major issue since many of these returns will eventually end up landfills and never be returned to the product purchasing rolls.
Kevin Mahoney, managing director of the retail practice at Deloitte Consulting LLP, told Women’s Wear Daily that returns are a significant cost for retailers, “and the rise of online shopping could increase this trend. As retailers implement policies to address this issue, they should avoid negatively affecting customer loyalty and retention. Effective policies should reduce losses for the retailer
while minimally impacting the customer experience. This approach can be crucial for long-term success.”