Consumer returns flatten as online ordering becomes more accurate

The return season is upon us as people hurry back to stores to exchange unwanted gifts that were left under the Christmas tree.

But it appears consumers have gotten better at buying exactly what they want, and retailers such as Duluth-based women's clothing company Maurices have improved the process of making sure products are the right fit.

As a result, the rate of retail returns has stopped growing — a major win for retailers.

Over the past few years, there were huge jumps in the amount of merchandise that was returned after being purchased. From 2020 to 2021, the return rate jumped from 10.6% to 16.6%.

But retailers across the country now say they expect consumers to return about the same percentage of goods they bought in 2022 as they did the year before, according to data released in December by the National Retail Federation and Appriss Retail.

In Minnesota, more than $15 billion worth of merchandise, or 16.5% of sales, was estimated to be returned.

Even holiday gift returns, which are being rushed back to stores now, will likely remain flat this season at about 18%.

And for the first time since online return data began to be analyzed by the retail federation in 2019, online return rates are in line with overall returns. That means people are sending back items they bought online at the same overall rate as returns for all products they returned including those they purchased in stores — an indicator of how reliable and sophisticated online retail has become.

"Now when you go online and you look to buy a shirt, there are many, many measurements. You have the length of the shirt. You have the chest, the waist," Mark Mathews, the retail federation's vice president of research development and industry analysis, said in an interview with the Star Tribune. "When you're buying a shirt, you know a lot more about it. ... We have the ability to buy things a little bit more accurately than we have in the past."

Shoppers have been buying more items online and have become better at getting what they want, Mathews said.

Consumers spent a record $211.7 billion online from Nov. 1 to Dec. 31, up 3.5% year-over-year, according to Adobe Analytics data released Thursday.

Local clothing brand Maurices has recently included more information on its website to help customers pick the right items.

"Our team is consistently working to improve our customers' overall experience online through clear product descriptions, size charts and information, search, and navigation," said Maurices CEO David Kornberg in an email.

Besides the standard sizing for its products, Maurices now has detailed size charts for jeans, bralettes, panties and swimwear online. For jeans, which can be difficult to get the right fit, the size chart was expanded even further to include each brand's size offerings.

Maurices recently started to add user-generated content to its website so that customers can see real purchasers wearing its products. Maurices has also started to indicate when an item is selling fast online to show customers what's popular and offer a visual outfitting feature to help customers build their wardrobe.

In a unique return program that it introduced in November, shoppers who buy a pair of regular priced Maurice-branded "M jeans" can exchange them for a new pair if their size goes up or down within a year.

Thanks to some of the company's recent improvements, Maurices' return rate has not risen even as its online sales have grown, Kornberg said.

Outside of clothing retailers, there have been improvements in how customers can select the right furniture and home items. Last year, Target's "home planner" online tool, which allows people to redesign a sample 3D room, became popular on TikTok.

"If you think about what retailers have been doing over the past five to 10 years, it's about making the online experience more user friendly," Mathews said.

"A lot of that is about efficiency. It's also about making sure you know more about the product and how that product fits — whether it be clothes and how they fit you or a couch and how it fits your living room."

Returns cost U.S. retailers $816 billion in lost sales annually. Nearly $85 billion of returns are fraudulent; however, return fraud rates have also remained essentially flat year-over-year.