Retail returns are expected to reach record levels this holiday season, with more Americans doing their Christmas shopping online.
According to the National Retail Federation (NRF), annual sales growth of 3% to 4% is expected, with total sales reaching between $957 billion and $966 billion. Online sales are predicted to increase even more sharply, by between 7% and 9%, to a total of between $273 billion and $278 billion.
A recent study from commercial real estate and investment company CBRE and reverse logistics provider Optoro predicts that holiday returns could amount to a whopping $173 billion, with over $80 billion of this from online shopping alone. This is a significant increase from the $126 billion worth of returns during the same period in 2020.
Joe Dunlap, a managing director and supply chain expert at CBRE, stated that while brick-and-mortar stores have a normal return rate of about 8% to 10%, e-commerce return rates are usually around double that, and can spike to around 30% during the holiday season.
The convenience of online shopping, including the ability to order multiple colors, sizes, or styles from the comfort of one’s home, means that more items than ever are coming back.
Using the data from CBRE and the NRF, it is estimated that online sales should constitute around 28% of this year’s holiday sales. However, these same online sales are expected to account for approximately 47% of all holiday returns.
This is where the trouble lies for retailers, as returns can be costly. The cost of returns has risen by 50%, or $149 billion, since 2018, according to CBRE and Optoro.