What's Happening?
The National Retail Federation (NRF) has released its 2025 Retail Returns Landscape report, forecasting a 15.8% return rate, amounting to $849.9 billion in returns. This marks a slight decrease from the
2024 return rate of 16.9%, which equated to $890 billion in returned sales. The report highlights that 17% of holiday sales are expected to be returned, consistent with previous years. Ecommerce purchases continue to have higher return rates, with an estimated 19.3% of online sales expected to be returned. Gen Z consumers, aged 18 to 30, are contributing to this trend, averaging 7.7 online returns over the past year. The report is based on surveys from 2,006 consumers and 358 ecommerce professionals from large U.S. merchants.
Why It's Important?
Returns are a significant challenge for retailers, but they also represent a crucial factor in consumer purchasing decisions. According to the NRF report, 82% of consumers consider free returns a major purchase consideration, up from 76% last year. Retailers are motivated to streamline the returns process, as 71% of consumers are less likely to shop at a retailer after a poor returns experience. Additionally, 80% of consumers would share negative experiences with friends and family, amplifying the impact. The report underscores the importance of returns in fostering brand loyalty and customer satisfaction, with retailers increasingly using AI to combat returns fraud, which accounts for 9% of all returns.
What's Next?
Retailers are expected to continue evolving their returns processes to meet consumer expectations and reduce fraud. The NRF report indicates that 85% of retailers are deploying AI to detect and prevent fraudulent returns, such as overstated quantities and counterfeit items. As return policies become strategic touchpoints, retailers must modernize reverse logistics to enhance customer satisfaction and safeguard operations. The focus will be on creating seamless and hassle-free returns experiences to maintain competitiveness in the high-pressure retail landscape.
Beyond the Headlines
The report highlights ethical concerns surrounding consumer return behaviors, with 45% of consumers believing it is acceptable to 'bend the truth' when making returns. This attitude, particularly prevalent among younger consumers, poses challenges for retailers in maintaining integrity and trust. The increasing use of AI to tackle returns fraud reflects a shift towards more sophisticated and proactive measures in retail operations.
