What is as predictable as large end-of-year holiday retail sales figures? That many of those gifts will come rolling back. A report from the National Retail Federation and Appriss Retail estimated that in 2023, the total return rate was 14.5% of sales.
Combine that with the Forrester estimate of U.S. holiday sales topping $1 trillion — up 3.7% over last year and about a quarter of it happening online. Or use the Capital One estimate of $1.22 trillion. Returns might be $177 billion.
Retailers with physical locations have a natural advantage. A separate Forrester study says that 63% of customers prefer to return products through stores.
Take it all together and it becomes the context for a CBRE report on how retailers make their physical stores an integral part of their reverse logistics. The stores as return locations are convenient for customers. The retail chains save on return costs and see greater foot traffic and even in-store sales.
According to CBRE, the retailers use a Buy Online/Return In Store (BORIS) omnichannel strategy. Those account for half of online purchase returns in 2023. There are five benefit areas of BORIS systems. The first is cost savings. It’s much cheaper for a company to collect products at a store and then ship them back to a distribution center, getting the benefit of transit volume.
Next, customers like the convenience of dropping something off at a store rather than repacking a product and wait for a refund. There is also customer service to help people with refunds and finding replacement products.
Stores can take advantage of cross-selling and up-selling. Some retailers have taken a step and now accept returns from online-only retailers to increase traffic and sales. The integrated form of the inbound supply chain allows products to be returned to inventory more quickly.
BORIS strategies have made some leading retailers reconsider where to locate stores and how to design them. Customers don’t want to stand in line for long periods to hand the product over.
CBRE says that e-commerce sales are expected to increase to 35% of all retail sales other than cars and gasoline by the third quarter of next year. “This will lead to increased demand for physical retail stores that can also handle the customer service and inventory management aspects of these returns,” the report said.