Returns continue to pose a significant cost for the retail industry, with total returns projected to reach $890 billion in 2024, according to a report released today by the National Retail Federation and Happy Returns, a UPS company. Retailers estimate that 16.9% of their annual sales in 2024 will be returned.
“Returns play an important role within the retail ecosystem and offer an additional touchpoint for retailers to provide a positive interaction with their customers,” said NRF Vice President of Industry and Consumer Insights Katherine Cullen. “Retailers recognize the value of returns and their integration with brand loyalty, and many are prioritizing their returns capacity to ensure a seamless customer experience.”
Return policies and expectations impact the consumer all throughout their shopping experience. Seventy-six percent of consumers consider free returns a key factor in deciding where to shop, and 67% say a negative return experience would discourage them from shopping with a retailer again.
Shoppers also value flexibility during the returns process and acknowledge the impact it can have at the initial point of purchase. Eighty-four percent of consumers report being more likely to shop with a retailer that offers no box/no label returns and immediate refunds.
In response to consumer demand, retailers continue to enhance the return experience for customers. More than two-thirds of retailers surveyed (68%) say they are prioritizing upgrading their returns capabilities within the next six months. In addition, improving the returns experience and reducing the return rate are viewed as two of the most important elements for businesses in achieving their 2025 goals.
However, retailers must balance meeting consumer demand for seamless returns against rising costs. Fraudulent and abusive returns practices create both logistical and financial challenges for retailers.
A majority (93%) of retailers said retail fraud and other exploitive behavior is a significant issue for their business. In terms of abuse, bracketing – purchasing multiple items with the intent to return some – has seen growth among younger consumers, with 51% of Gen Z consumers indicating they engage in this practice.
“Return policies are no longer just a post-purchase consideration – they’re shaping how younger generations shop from the start,” said David Sobie, co-founder and CEO of Happy Returns.
“With behaviors like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics. Solutions like no box/no label returns with item verification enable immediate refunds, meeting customer expectations for convenience while increasing accuracy, reducing fraud and helping to protect profitability in a competitive market.”
Even though returns occur throughout the year, they are more prevalent during the holiday season. A separate NRF study found that for the 2024 winter holidays, retailers expect their return rate to be 17% higher, on average, than their annual return rate.
However, retailers are taking preventative measures to address the higher volume by seeking additional support from third-party logistics providers (40%) and hiring additional seasonal staff to specifically handle returns (34%).
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