What's Happening?
The National Retail Federation (NRF) has released its 2025 Retail Returns Landscape report, projecting a 15.8% return rate, amounting to $849.9 billion. This marks a slight decrease from the 2024 return rate of 16.9% and $890 billion in returned sales.
The report highlights that 17% of holiday sales are expected to be returned, consistent with previous years. Online 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 noted for making an average of 7.7 online returns over the past year, more than any other generation. 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 key selling point for consumers, with 82% citing free returns as a major purchase consideration. Retailers are motivated to streamline the returns process, as 71% of consumers are less likely to shop at a retailer where they have had a poor returns experience. The report indicates that returns can be an opportunity for retailers to enhance customer satisfaction and foster brand loyalty. However, returns fraud remains a major issue, with 9% of all returns being fraudulent. Retailers are increasingly using AI to detect and prevent fraud, with 85% deploying such technologies to combat practices like overstated quantity of returns and counterfeit items.
What's Next?
Retailers are expected to continue modernizing their reverse logistics to address rising return rates and behaviors like bracketing. The NRF emphasizes the strategic importance of return policies in influencing consumer shopping behavior, particularly among younger consumers. As retailers work to meet customer expectations, they are likely to invest in technologies and processes that enhance the returns experience, reduce fraud, and safeguard operations in the competitive retail landscape.
Beyond the Headlines
The evolving returns process highlights ethical considerations, as 45% of consumers believe bending the truth is acceptable when making returns. This cultural shift in consumer behavior poses challenges for retailers in maintaining integrity and trust. The use of AI in detecting fraud also raises questions about privacy and data security, as retailers balance technological advancements with consumer rights.