The 2021 holiday shopping season was like no other, and it surprised us all. Retail sales from November 1st to December 31st grew 14.1% over the 2020 sales numbers, despite the challenges facing shoppers and retailers. And this rise in sales (especially ecommerce sales) brought forth a nearly 34% increase in returns as a percentage of holiday sales compared to the prior year, according to Appriss Retail research.
Anticipation Drove Behaviors
This holiday season, consumers had plenty of hurdles to overcome with rising inflation, uncertainty over shipping delays, long lead times on specific products, and limited willingness to shop in stores due to COVID-19. Retailers didn’t have it much easier. They faced supply chain issues, inventory scarcities, staff shortages, and lack of facetime with consumers.
The merchandise return rate was expected to be higher than in previous years—an influx that 85% of retailers were planning to manage using in-house staff. Most (56%) planned to hire more employees to help handle the workload.
Meanwhile, consumers decided to make sure they were well-prepared for the holidays. Retailers took advantage of this opportunity, some advertising as early as July, and offering sales beginning in October. For instance, Target, Amazon, and Best Buy promoted their holiday sales before Halloween. As a result, 49% of shoppers began their holiday spending in November.
2021 Holiday Results
Based on the survey conducted by the National Retail Federation, 45% of retailers said that their brick-and-mortar returns had increased compared to pre-pandemic levels. Escalating returns tend to coincide with a rise in fraud, especially during the holiday season. This is often a result of hiring temporary staff who are less familiar with store policies and operations.
To highlight the financial magnitude and impact of holiday returns in 2021, take a look at the US holiday sales, returns, and fraud numbers presented in the “Consumer Returns in the Retail Industry” report by the NRF and Appriss Retail:
The 34% increase in the return rate for the holiday season negatively impacted overall retailer profitability, particularly when paired with the 67% increase in fraudulent holiday returns transactions.
We have identified 6 fraudulent return transactions that are prevalent during the holidays:
- Returns of stolen merchandise
- Returns using counterfeit or stolen receipts
- Returns of used non-defective merchandise (wardrobing)
- Cross-retailer returns
- Price switching and price arbitrage
- Employee assisted fraud
While it is important to guard against losses like these, most holiday returns are legitimate. They are simply a part of the shopper’s journey.
Merchandise Returns Offer Opportunities
Holiday gift-giving can drive new shoppers to your stores when they return an unwanted present. This is your chance to impress them with your service and recapture the revenue by helping them find an item they would like. Returns are also a chance to re-engage with your existing consumers and show them that you care about their happiness. For insight into ways to enhance your omnichannel returns experience, read our blog.
Holiday returns rose in 2021. The related costs are impacting retailers nationwide. With the returns and shrink numbers firmly in hand, you are in a good position to evaluate your returns process. What changes can you make to impress consumers and build their loyalty? How can you control costs without changing your policy? You can check out the white papers in our Resources section for inspiration and data on techniques you could use to reduce costs and increase sales. It could make millions of dollars of difference—try our calculator to estimate the impact on your company.
Carrie Cassidy, Director, Marketing, Appriss Retail
A technology advocate for more than 25 years, Carrie makes information about advanced data analytics solutions accessible to retail professionals through a variety of media. She has written numerous white papers, case studies, and articles for a variety of industries ranging from motion control to human resources.