At a time when retail returns are becoming a bigger dilemma for store operators, a National Retail Federation report suggests returns will come in at 15.8% of sales for 2025, totaling $849.9 billion.
A poll by NRF and Happy Returns, a UPS company, indicated retailers expect 17% of holiday sales to come back, consistent with previous years.
As they balance policies that satisfy shoppers and protect the bottom line, retailers face a returns rate in line with 16.9% last year. Total value of returns un 2024 was $890 billion, according to NRF. Although the overall return rates may remain steady year over year, some sectors experience more pressure than others. On the digital side of the industry, shoppers are expected to return about 19.3% of online sales in 2025, NRF reported.
GenZers are among the consumers who generate the most returns. Shoppers between the ages of 18 and 30 sent back an average of 7.7 online purchases during the past 12 months, more than any other generation.
Free returns are a major draw for shoppers, with 82% citing them as a key consideration when making a purchase, up from 76% in last year’s NRF report. Consumers also value immediacy, with 76% saying they are more likely to choose a return option that provides an instant refund or exchange.
A poor returns experience can deter future purchases. About 71% of consumers say they are less likely to shop with a retailer again after a poor returns experience, up from 67% in 2024. And four out of five said they would share their negative return experiences with friends and family.
Retailers are faced with balancing customer expectations and the need to grow online businesses against the rising operational costs associated with returns, NRF noted, even as they deal with external pressures such as tariffs. Retailers surveyed for the NRF report indicated increasing online sales and reducing return rates are top 2026 priorities.
Some retailers are changing conditions involving returns, although practices that make sending back goods more difficult or expensive irk a lot of consumers. Top reasons retailers charge for returns are increases in the cost of processing (cited by 40%), increases in carrier shipping costs (40%), and economic uncertainty and the risks associated with tariffs (33%). Under the circumstances, 64% of merchants surveyed said updating their returns process during the next six months is a priority.
The report found 9% of all returns are fraudulent, with retailers that track such occurrences saying increases in practices such as overstated quantity of returns (71%), empty box or “box of rocks” ploys (65%), and decoy returns such as those associated with counterfeit items (64%). However, technology provides some relief, with artificial intelligence being a popular option that 85% of survey respondents said they are employing to detect or prevent return fraud.
Consumers, especially younger shoppers, continue to make returns choices that cost retailers. Close to two-thirds of shoppers admit to participating in at least one costly returns behavior, which can range from wardrobing, as when consumers buy multiple sizes or styles to choose from at home and send back the unwanted rest, to sending back different items than the return states. Indeed, 45% of consumers believe bending the truth is acceptable when making returns, especially if they are unsatisfied with a purchase.
Retailers said they plan to manage returns and related fraudulent activity by increasing focus on third-party logistics partners (49%), hiring seasonal staff to handle returns (43%) and extending return windows (37%).
“Returns are no longer the end point of a transaction,” said Katherine Cullen, NRF vice president of industry and consumer insights. “They provide an opportunity for retailers to create a positive experience for customers and can translate to brand loyalty. Retailers are constantly evolving and working to meet customer expectations, and they recognize the importance the returns process plays.”
David Sobie, co-founder and CEO of Happy Returns, added, “Return policies and their overall process have transformed into a strategic touchpoint for retailers, influencing how younger consumers shop from the outset. To stay competitive amid rising return rates and behaviors like bracketing, retailers must modernize their reverse logistics to enhance customer satisfaction, reduce fraud and safeguard their operations in today’s high-pressure retail landscape.”
