Shoppers have high expectations when it comes to returns, and it’s putting retailers in a tight spot.
According to a recent report from the National Retail Federation and Happy Returns, a UPS company, it’s estimated that total returns for the retail industry will reach $850 billion by the year’s end.
The study, which surveyed more than 2,000 consumers and 350 retail professionals, reveals a growing tension between the returns experience that shoppers expect and what retailers can afford to offer.
Why retailers are changing policies
Consumers expect easy — and free — returns, but some shoppers are costing retailers more when it comes to returns. Over 60% of consumers admit to at least one return behavior that adds to costs for merchants.
That includes fraudulent returns, which make up 9% of all returns, and include the following, according to retailers:
- Overstating quantities in returns
- Sending back empty boxes instead of merchandise
- Sending in counterfeit items instead of what they purchased
The study found that 27% of all consumers admit to “wardrobing” — buying clothes to wear once and then returning them — but the numbers skyrocket to 49% of Gen Z shoppers.
In fact, Gen Z shoppers are in large part responsible for reshaping returns policies. Two-thirds of Gen Z shoppers say it’s acceptable to bend the truth when making a return, especially if they’re unsatisfied with a purchase, compared to 45% of shoppers overall.
The younger shoppers made an average of 7.7 returns of online purchases in the last year — more than any other generation — despite shopping online less frequently than older consumers.
There’s also “bracketing,” where someone buys one item in multiple sizes and returns what doesn’t fit. It’s not fraudulent, but it contributes to additional shipping and restocking fees.
Nearly three-quarters of retailers now charge fees for at least one return method. Merchants say that’s due to all these factors, plus rising shipping costs, economic uncertainty and potential tariffs.
How returns are changing
Some retailers are tightening return windows, requiring intact tags and receipts more strictly or designating certain sale items as final. In some senses, it’s working:
- 53% of retailers say they’ve seen overall return rates drop
- 43% say they’re recouping revenue
But it’s not all good news:
- 47% report an increase in customer complaints
- 44% have seen return fraud increase rather than decrease
- 37% say they’ve lost customers over return fees
Rather than risk losing customers, some retailers are investing in making returns easier, such as box-free, label-free returns and options for buying online and returning in store.
About half of retailers report that faster returns processing would be good for maintaining margins, as well as quicker refunds for shoppers.
The vast majority of merchants say they’re using artificial intelligence or machine learning to help spot and combat returns fraud. However, less than half believe these tools effectively prevent fraud on their own.
Instead, retailers are focusing on service to better meet consumers’ high demands.
What this means for you
If you’re shopping honestly and within policy guidelines, the data shows your behavior matters to retailers. Most online shoppers consider free returns important, and they check return policies before buying from a retailer for the first time.
Shoppers also say they won’t shop with a retailer that charges for returns — and that a poor returns experience makes them less likely to shop with that retailer again.
The bottom line is that while some changes may feel restrictive, retailers are caught between cracking down on abuse and keeping honest customers happy.
Be sure to always read return policies carefully before you buy and to keep your receipts and tags intact. Remember that your return experience — good or bad — is something retailers take seriously.
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