What's Happening?
Retailers are increasingly grappling with the financial burden of product returns, which have become a significant issue in the retail industry. The problem has been exacerbated by consumer expectations for fast shipping and free returns, a trend that accelerated during the pandemic. According to Salesforce, there was a 10% increase in returns from the 2024 to 2025 holiday season, with the U.S. National Retail Federation estimating $850 billion worth of merchandise was returned in 2025. Retailers like Asos have begun implementing stricter return policies, such as charging fees for high return rates, to mitigate these costs. However, these measures risk alienating customers, particularly those who need to purchase multiple sizes to find the right
fit. Experts suggest that prevention, through better fit tools and accurate product data, may be a more sustainable solution.
Why It's Important?
The rising cost of returns is a significant concern for retailers, impacting their profitability and operational efficiency. As companies tighten return policies, they must balance cost-saving measures with customer satisfaction. Poor return experiences can deter future purchases, with 93% of consumers indicating they are less likely to shop with a brand again after a negative return experience. The use of AI tools to improve product fit and sizing could help reduce return rates by addressing issues at the point of purchase. This shift could lead to more personalized shopping experiences and potentially lower return rates, benefiting both retailers and consumers.
What's Next?
Retailers are likely to continue refining their return policies and investing in technology to prevent returns. As AI tools become more sophisticated, they may play a crucial role in helping consumers make better purchasing decisions, thereby reducing the likelihood of returns. Retailers will need to communicate policy changes clearly to maintain customer trust and satisfaction. The industry may also see increased collaboration between technology providers and retailers to develop solutions that address the root causes of high return rates.
