What: Returns will hit a record level this year and this raises questions on how to find new ways to manage this topic.

Why it is important: Some academics suggested appointing a Chief Return Officer. But would not this be adding up to the complexity of multiple layers in department stores we described in our 2021 White Paper?

The final quarter of the retailing year is when the industry takes account of the damage inflicted on bottom lines by the stubborn problem of returns. This fiscal year (ending Jan. 31 for most retail companies and brands) will be a record, estimated by the National Retail Federation to exceed $816 billion worth of merchandise. That's about 16% of total retail sales for the year being returns, up from about 10% two years ago. $816 billion is roughly equal to the combined sum of all US retail sales in 2021 for Walmart, Amazon, and Costco.

Returns are a nightmare for companies. Most of the returns that cannot be resold are apparel that will likely end up in a landfill in India or a landfill in Ghana. Returns are costly when general retailers' average net profit margin is less than 2.5%.

An idea proposed by two University of Tennessee academics is to appoint an executive responsible for the end-to-end returns process. Another solution is to find ways to “limit returns before they happen, in the pre-sale process;” improve product descriptions “so customers have a better sense of what they are buying.”

With soaring returns, do retailers need a Chief Return Officer?