Retailers in the United States expect that 15.8% of their annual sales, amounting to $849.9 billion, will be returned in 2025, according to the 2025 Retail Returns Landscape report released by the National Retail Federation (NRF) and Happy Returns, a UPS company. This rate is similar to last year’s 16.9%, when returns totaled $890 billion.
Katherine Cullen, NRF Vice President of Industry and Consumer Insights, stated, “Returns are no longer the end point of a transaction. They provide an opportunity for retailers to create a positive experience for customers and can translate to brand loyalty.”
The report highlights that online sales continue to see higher return rates, with an estimated 19.3% of online purchases expected to be returned in 2025. The influence of Gen Z is also notable; individuals aged 18 to 30 made an average of 7.7 online purchase returns in the past year, more than any other generation.
Consumer expectations around returns are rising. Free returns have become increasingly important for shoppers—82% now consider them a major factor when making a purchase decision, up from 76% last year. Additionally, 76% of consumers say they prefer return options that offer instant refunds or exchanges.
A negative experience with returns can impact future shopping behavior. About 71% of consumers report they are less likely to shop again with a retailer after a poor return experience, up from 67% in 2024. Four out of five consumers said they would share a negative return experience with friends and family.
Retailers face challenges balancing customer expectations with operational costs and external pressures such as tariffs. Their top priorities for 2026 include increasing online sales and reducing return rates. Among the main reasons retailers charge for returns are increased costs for processing (40%), higher carrier shipping costs (40%), and economic uncertainty including tariff risks (33%). Nearly two-thirds (64%) of merchants say updating their returns process within the next six months is a priority.
Return fraud remains a concern for the industry. The report finds that 9% of all returns are fraudulent. Retailers tracking these incidents note increases in overstated quantity of returns (71%), empty box or “box of rocks” scams (65%), and decoy or counterfeit item returns (64%). Technology is being used as a countermeasure; 85% of retailers surveyed said they use artificial intelligence to detect or prevent return fraud.
Consumers—especially younger ones—are engaging in behaviors that increase costs for retailers. Nearly two-thirds admit to at least one costly practice such as “wardrobing” (using an item once before returning it), “bracketing” (buying multiple versions and returning most), or sending back different items or empty boxes. Additionally, just under half (45%) believe it is acceptable to “bend the truth” when making a return if dissatisfied with a purchase.
David Sobie, co-founder and CEO of Happy Returns, commented: “Return policies and their overall process have transformed into a strategic touchpoint for retailers, influencing how younger consumers shop from the outset.” He added: “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.”
Ahead of the winter holiday season, retailers expect about 17% of holiday sales will be returned—a figure consistent with previous years. To manage these seasonal challenges and combat fraudulent activity, strategies include increasing reliance on third-party logistics partners (49%), hiring seasonal staff for handling returns (43%), and extending return windows (37%).
The findings are based on two surveys conducted by NRF and Happy Returns during the summer. One survey gathered responses from over 2,000 consumers who had returned at least one online purchase in the past year; the other engaged more than 350 e-commerce professionals at large U.S. merchants to understand their operational challenges regarding returns.
For more details on the report’s findings visit the 2025 Retail Returns Landscape report.
