Retailers estimate that 15.8% of their annual sales will be returned this year, totaling $849.9 billion, according to the 2025 Retail Returns Landscape report released by the National Retail Federation (NRF) and Happy Returns.
“Returns are no longer the end point of a transaction,” says 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.”
An estimated 19.3% of online sales will be returned in 2025, according to the report, with Gen Z shoppers returning items the most. Those between the ages of 18 and 30 made on average 7.7 returns of online purchases in the last 12 months.
Consumer expectations are increasing around returns, with 82% of them citing free returns as a major draw when considering making a purchase. 76% of shoppers also say they are more likely to choose a return option that provides an instant refund or exchange.
Retailers are faced with the challenge of balancing consumer expectations and the need to grow online channels against the rising operational costs associated with returns and external pressures like tariffs. The survey revealed retailers charge for returns mostly because of increases in the cost of operations to process returns (40%), increases in carrier shipping costs (40%) and economic uncertainty and risk of tariffs (33%). Almost two-thirds (64%) of retailers are prioritizing updating their returns process in the next six months.
Consumers continue to choose return options that are costly to retailers. Nearly two-thirds of consumers surveyed said they have participated in at least one costly returns behavior, like wardrobing and “bracketing” or sending back different items or empty boxes.
“Return policies and their overall process have transformed into a strategic touchpoint for retailers, influencing how younger consumers shop from the outset,” says David Sobie, co-founder and CEO of Happy Returns. “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.”
The survey also found retailers expect 17% of holiday sales to be returned. Plans to mitigate holiday returns and fraudulent activity include increasing focus on third-party logistics partners (49%), hiring seasonal staff to handle returns (43%) and extending return windows (37%).
