The National Retail Federation (NRF) is forecasting a 15.8% return rate in 2025, totaling $849.9 billion, according to the 2025 Retail Returns Landscape report created in partnership with Happy Returns, a UPS company. This represents a slight decrease from the 2024 return rate of 16.9% and $890 billion in sales of products that were eventually sent back by customers. Surveyed retailers forecast that 17% of holiday sales will be returned, consistent with previous years.
Return rates for ecommerce purchases, which traditionally run higher than rates for in-store transactions, will stay true to form: an estimated 19.3% of online sales will go back this year. Members of Gen Z are part of the reason this figure stays high; these consumers, currently aged 18 to 30, have made an average of 7.7 online returns over the past 12 months, more than any other generation.
The report’s results are based on two surveys. One includes responses from 2,006 consumers who had returned at least one online purchase over the past year; the other surveyed 358 professionals in ecommerce from large (over $500 million in revenue) U.S. merchants representing a mix of verticals.
The Opportunity in Returns
While returns are a thorny challenge for retailers and brands, they’re a key selling point for consumers: 82% cite free returns as a major purchase consideration, up from 76% last year. Consumers also value fast action: 76% say they’re more likely to choose a return option that features an instant refund or exchange.
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Retailers have strong motivations to make the returns experience seamless and hassle-free: 71% of consumers said they’re less likely to shop at a retailer where they’ve had a poor returns experience, up from 67% in 2024, and 80% said they would share a negative experience with friends and family, amplifying the negative impact.
“Returns are no longer the end point of a transaction,” said Katherine Cullen, VP of Industry and Consumer Insights at NRF in a statement. “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.”
Retailers Turning to AI to Tackle Returns Fraud
Unfortunately, consumers, particularly younger ones, seem to be addicted to costly return behaviors. Close to two-thirds of surveyed consumers admit to at least one such behavior, from wardrobing and “bracketing” (ordering multiple sizes of the same item) to sending back different items or empty boxes. Disturbingly, 45% of consumers believe “bending the truth” is acceptable when making returns, particularly if they’re unsatisfied with their purchase.
Returns fraud remains another big problem: the NRF report found that 9% of all returns are fraudulent. Retailers that track such incidents report increases in practices such as overstated quantity of returns (71%); empty box or “box of rocks” (65%); and decoy returns such as counterfeit items (64%). To combat these and other types of fraud, 85% of retailers are deploying AI to detect and prevent such incidents.
“Return policies and their overall process have transformed into a strategic touch point for retailers, influencing how younger consumers shop from the outset,” said David Sobie, CEO and Co-founder of Happy Returns in a statement. “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.”
