NRF survey finds return rates on the rise
(WASHINGTON, D.C.) – As retailers get a handle on return fraud, many softened return policies this holiday season as a way to provide good customer service. According to the National Retail Federation’s (NRF) third annual Return Fraud Survey, completed by 82 retail loss prevention executives, more than half of retailers (52%) said their holiday return policies would be more lenient than the policy for the rest of the year, up from 35 percent who said so in 2007.
In addition, the number of retailers who said their holiday return policy would loosen compared to last holiday season tripled, from 3.4 percent of retailers to 11 percent. Common changes included retailers extending the amount of time for returns to be made and also being more flexible to customers without a receipt. In comparison, 17.1 percent of retailers said their return policy tightened this holiday season, up slightly from 15.3 percent last year.
“In a year where practicality is paramount, many retailers are making return policies more flexible for customers who need to bring back duplicate or unwanted gifts after the holidays,” said NRF Vice President of Loss Prevention Joe LaRocca. “Retailers seem to be finding a balance between providing good customer service to shoppers while preventing criminals from taking advantage of lenient policies.”
The survey also provided more evidence of a weak economy, as retailers said that returns as a percentage of sales are on the rise. 2008 return rates are estimated to reach 8.7 percent of sales, up from 7.3 percent one year ago. The amount of merchandise returned to stores in 2008 is estimated to reach $219.1 billion, with $47.1 billion of those returns coming from holiday purchases.
“Consumers experiencing a bit of buyer’s remorse as a result of the economy may be returning unworn and unused merchandise to stores,” said NRF Vice President of Loss Prevention Joe LaRocca. “While retailers look at returns as a way to provide good customer service, an increased rate of returns is yet another challenge for retailers during a tough economic climate.”
Retailers know the decision to make return policies more lenient may come at a cost. According to the survey, return fraud continues to plague the retail industry and will cost retailers an estimated $3.54 billion for the 2008 holiday season, down slightly from $3.6 billion in 2007. (Retailers will lose $11.8 billion to return fraud in 2008.) However, retailers seem to be tackling the problem, as return fraud is expected to decrease to 7.5 percent of holiday returns from 8.9 percent in 2007.
Though retailers seem to be confronting return fraud, incidents continue to permeate through most retail stores. According to the survey, most retailers (88.9%) have had stolen merchandise returned to stores within the past year. Retailers also report being victimized by returns of merchandise originally purchased with fraudulent or stolen tender (74.1%) and returns using counterfeit receipts (45.7%).
The unethical practice of “wardrobing,” the return of non-defective, used merchandise – especially in the apparel and electronics categories – continues to be problematic for retailers. Nearly two-thirds of retailers (64.2%) have seen this type of merchandise returned in the past year – down from 66.1 percent in 2007, but up from 2006 levels (56.0%).
For more information please visit www.nrf.com.