Commercial Real Estate News
Holiday Retail Sales for 2024 to Hit Record $1 Trillion
Physical Stores Now Integral Part of U.S. Retailers' Reverse Logistics
Global property consultant CBRE reports that U.S. retailers are adopting strategies to make in-store returns more convenient, encouraging customers to return online purchases to physical locations instead of through the mail. This shift helps retailers reduce return-related costs and boosts in-store foot traffic, creating opportunities to drive additional sales.
Retail consulting firm Forrester predicts holiday retail sales for November and December 2024 will hit a record $1 trillion, with over a quarter of these sales taking place online. Of this total, approximately $160 billion, or 16%, is expected to be returned, with return costs averaging 30% of each product's value, according to third-party returns provider Optoro.
To mitigate these costs, retailers are increasingly implementing the Buy Online/Return In Store (BORIS) omnichannel strategy. In 2023, BORIS accounted for 50% of online returns, totaling $123 billion. According to Forrester's Retail Topic Insights Survey, 50% of respondents prefer returning items to physical stores. This preference is driving retailers to rethink their location and store design strategies.
Retailers are expanding in neighborhood, community, and strip centers to offer convenient parking, making it easier for customers to return items. CBRE Research reveals that retailers are signing leases averaging 11 months longer at these locations in 2024 compared to the previous year. Additionally, store designs are being revamped to streamline the return process. Nearly 45% of respondents to Optoro's recent survey identified long checkout lines as the biggest inconvenience when returning items in-store. To address this, retailers are creating dedicated return areas, often located in the middle or back of stores, to facilitate returns and promote cross-shopping.
With e-commerce sales projected to grow from 23.2% of total retail sales in Q3 2024 to 35% by Q3 2035 (excluding autos and gasoline), the use of BORIS is expected to increase. This trend will drive demand for physical stores capable of managing customer service and inventory needs for returned goods.
Key Benefits of BORIS:
- Cost Savings: In-store returns reduce shipping costs and may lessen the need for additional warehouse space.
- Convenience: Customers find in-store returns easier, avoiding shipping and refund delays.
- Customer Service: Store staff can provide immediate assistance, such as exchanges or refunds, boosting customer satisfaction and loyalty.
- Cross-Selling: Returns encourage in-store shopping, creating opportunities to sell additional products. Some retailers also accept returns for online-only brands to drive traffic and sales.
- Inventory Management: Products returned in-store are quickly reintroduced into inventory, reducing stockpile at warehouses.
As retailers continue to adapt to the evolving e-commerce landscape, strategies like BORIS will remain integral to balancing operational efficiency with customer satisfaction.
