Salesforce: 28% Uptick in Returns Could Dampen Record Holiday Spending

Artificial intelligence (AI) helped holiday sales reach record levels this year, new Salesforce data shows.

However, the company said in a report issued Monday (Jan. 6), high rates of returns could hinder the overall profit margins on the $1.2 trillion in global sales.

“Retailers had a robust holiday season, but a 28% rise in the rate of returns compared to last year is a cause for some concern,” Caila Schwartz, director of consumer insights at Salesforce, said in a Monday news release.

“Retailers who have embraced AI and agents are already seeing the benefits, but these tools will be even more critical in the new year as retailers aim to minimize revenue losses on returns and reengage with shoppers,” Schwartz added.

According to the report, this “better-than-expected” holiday shopping season was fueled by surges in mobile and social commerce, as well as an increase in consumer spending following months of saving in the first half of last year.

Still, the report found that shoppers have already returned $122 billion in merchandise. And both consumers and retailers embraced AI and agents to improve their experiences via product recommendations and personalized order support, which Salesforce said influenced $229 billion — or 19% — of all online orders.

Salesforce said that retail use of generative AI features rose by 25% during the holiday season compared to September and October of last year. And consumers turned to AI- and agent-powered chat for customer service 42% more than they did during the holiday season in 2023.

As PYMNTS wrote last week, returns have come to define January’s retail landscape, so much so that analysts have taken to calling the period “Returnuary,” with consumers beginning to realize “that the reality of returns as a function of commerce is more of a feature of the landscape than it is a bug.”

Last year, returns made up $743 billion, or 14.5%, of the $5.13 trillion of reported retail sales, compared to 8.8% in 2012, a jump of 60%. And the 28% uptick reported by Salesforce exceeds the 17% increase in return rates projected before the holidays.

“For savvy eCommerce players, returns can ultimately represent an opportunity to reinforce customer loyalty, optimize operations and innovate for the future,” PYMNTS wrote. “Perhaps the most significant challenge, however, is customer experience.”

The PYMNTS Intelligence report “2024 Global Digital Shopping Index: SMB Edition,” commissioned by Visa Acceptance Solutions, found that retailers who expect an increase in revenue were 31% more likely to offer online returns than merchants that expected their revenues to remain unchanged.