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October 16, 2025
Retail Returns Are Down, But Will Consumers Abide Stricter Return Policies?
According to the National Retail Federation’s (NRF) latest report on retail returns, the “2025 Retail Returns Landscape,” there are a myriad of complex issues solidifying around polarizing points of view — one from the consumer end of things, and the other from retailers.
There is one silver lining of note, however: Overall, retail returns are down from a year ago, with estimates showing a total of $849.9 billion in returns expected this year (or 15.8% of annual sales), versus ~$890 billion in 2024 (or about 16.9% of last year’s annual sales).
With that being said, a gulf between consumer expectations regarding generous return policies and retailers’ willingness — or perhaps ability — to continue these policies is heightening. A few of the most pertinent data points follow:
- Return fraud continues to plague retailers’ bottom lines. Approximately 9% of returns are deemed fraudulent. Further, nearly half of consumers polled indicated that it was okay to “bend the rules” when returning items, especially if they aren’t satisfied with their purchase.
- More than half (57%) of shoppers polled said that they will not shop with a retailer after having been charged for a return. This figure is up substantially from only a year ago, when it stood at 40%. This is concerning, as nearly three-quarters (72%) of merchants surveyed indicated that they have started charging for at least one return option over the course of the past 12 months.
- The next generation of shoppers, namely Gen Z, are more prone to place more returns. Respondents between the ages of 18 and 30 made 7.7 returns of online purchases, on average, over the past 12 months — more than any other age cohort.
- Despite all of the above, consumers are sticking to their guns when it comes to valuing free returns. A vast majority (82%) said that free returns are an important consideration when shopping online (ticking upward from 76% in 2024), 81% will scrutinize or research a retailer’s return policies before placing an order with them (up from 77% last year), and 71% indicated that a poor return experience would dissuade them from doing business with a retailer moving forward (up from 67% in 2024). All in all, this draws a portrait of consumers taking the threatened end of free return policies seriously.
Consumers and Retailers Appear at Odds Over Free (or Generous) Return Policies: Can Either Side Be Satisfied?
As the NRF survey seemingly highlighted, it looks like consumers are digging their heels in when it comes to expectations around the retail returns process.
“Shoppers are more likely than ever to base their repeat purchases on returns experiences. From free return shipping to instant refunds, customers expect a seamless process — and they’re willing to walk away from retailers that fail to deliver,” the study authors wrote.
However, with close to two-thirds of consumers (62%) reporting that they’d participated in at least one costly or abusive return behavior — such as bracketing or wardrobing, or worse, swapping items, sending empty boxes, or similar — it may come as little surprise that so many retailers are tightening their policies.
“On the one hand, consumers have high expectations, and for the most part want returns to be free, fast, and frictionless. On the other, merchants face rising operational costs, growing fraud exposure, and pressure to protect margins. To navigate this tension, many retailers are reshaping their returns policies. However, some may still run the risk of introducing friction into the customer experience,” the study authors added.
Discussion Questions
Will consumers abandon retailers who adopt stricter return policies in favor of competitors who do not? Or is this position somewhat of a bluff?
Should the free shipping perk, above all, be maintained? If so, and if retailers accept this as part of the negotiation, what concessions would be most amenable in terms of tightening other return policies?
Are there any other options, in your opinion, that retailers could offer to make up for any potential loss of the free shipping perk?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Gary Sankary
Retail Industry Strategy, Esri
Jeff Sward
Founding Partner, Merchandising Metrics
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It is possible to nudge consumers into returning less by putting restrictions or charges around returns. However, the behaviors being changed are mostly careless buying, where consumers purchase without much thought and then return items they don’t want. What’s not affected as much are genuine returns of items that don’t fit or fall short of the specifications shown online. For those consumers, restrictions and charges are just extra friction that causes annoyance. This is the tightrope retailers need to walk.
The debate about free returns will continue, but ultimately every retailer needs to decide how they want to manage their returns policies. There will always be a percentage of online buyers who abuse returns privileges, and retailers should have zero tolerance for abusers. However, free returns is a meaningful competitive differentiator and there will always be some retailer that offer it. Offering free shipping a part of a loyalty program makes good sense. I also like free returns to store. While this option may be less compelling, it still gives customers a free returns option and creates a store visit that may convert into another sale.
This is spot on. If I am a loyal customer with a higher number of ongoing purchases and return something here and there, I don’t expect to be flagged or charged extra. Abusers, sure, different issue. But if I’m loyal and get charged for the occasional return, I’l find other options.
100% agree with you Mark.
Great point about free returns to the store. Customers can always over-buy, but there’s a charge for ecomm returns. The trip to the store at least gives the retailer a shot a remedying any issues.
“store visit that may convert into another sale.” That puts me as odd person out. When making most returns I’m in ‘errand mode’ not shopping mode. Many returns (macy’s, kohl’s merch to kohl’s, Amazon to whole foods), where I do not wander any aisles at all. The store I do shop when making returns is Walmart… since it’s much further drive, it’s a dual purpose trip.
Mostly I start a returns process inside my online account. I’m already in the space to reorder (to have shipped or BOPIS), vs waiting to re-shop at the store. I’m a shopper with a purpose, vs a thrill-of-hunt. (Digital shopping also has more codes & cash back click-thru options, vs at counter purchase)
Consistently enforcing reasonable return policies which are meaningful and understandable to customers can make a dramatic difference for retailers. The keys, though, are “consistency”, “understandable”, and “meaningful.” If customers come to believe the policies are, in any way, irrational, unreasonable, or established as punishment then the idea will backfire. Unfortunately, they needed to start this process well over a decade ago.
“in any way, irrational, unreasonable”… that not only applies to the physical return of product, but to the monetary refund too. Taking weeks to refund to method of purchase, is a really bad ending to the shopping experience. The last memory you are left with.
Retailers tightening return policies face a real balancing act: consumers increasingly demand free, frictionless returns, but operational costs and abuse (such as wardrobing and speculative purchasing) are rising sharply. The article notes that 82% of shoppers say free returns are important, 81% research a retailer’s return policy before buying, and 71% say a poor return experience would stop them from future purchases. Given this, some consumers may indeed abandon retailers with stricter policies, but I don’t believe it’s purely a bluff—I think many will tolerate modest changes, especially if value and convenience remain strong. The real risk is radical policy shifts that feel punitive or surprise customers, rather than incremental tweaks framed transparently.
Maintaining the free-shipping perk is still strategically wise, because shipping cost is one of the most visible and painful friction points for consumers. If retailers accept that perk as part of the “deal,” they should look to other levers for tightening: shortening the returns window modestly, limiting the number of free returns per year for non-loyalty members, encouraging in-store drop-off (which tends to drive incremental sales) instead of prepaid mail-back, and creating graded loyalty tiers where return benefits improve with membership. Transparent communication and consistency are key to preserving trust.
As for alternatives to compensate for any tightening of free-shipping/returns perks, retailers could offer enhanced value in other ways: instant store credit for returns (rather than full refund), bonus loyalty points for items kept rather than returned, “exchange-only” options with smaller hurdles (since exchanges keep sales in house), or gift card bonuses for early-window returns. These give consumers a reason to stay engaged while helping retailers manage margin, cost and return-rate risk.
“Maintaining the free-shipping perk is still strategically wise”.
Esp. outbound… consumers know an outbound shipping cost is a sunk cost if you return the item.
Good ideas for retailer-customer trade offs for making the return!
Returns…again?(Would there even be a RetaiWire without returns and AI as topics?) There’s not a whole lot I can add to what I (and others) have said already – we think think most people will accept reasonable restrictions (with the obious caveat that many will define “reasonable” in self-serving ways) – so let’s focus narrowly:
nearly half of consumers polled indicated that it was okay to “bend the rules” when returning items: I find this potentially concerning, altho the “potential” part hinges on whether they equate “bend” with “disregard altogether”, or not, andFire your customer: at what point does a retailer just have to let someone go, and stop being afraid that they’ll lose out to some competitor? If your business model hinges on losing money on transactions because someone else is willing to lose even more, dare I sugggest it isn’t very viable?
Are you asking to return this topic and replace it with another one?
No, I’d defect to another expert site if they did that; I think I’d like AI to select better topics (even a retail hallucination would be welcome!)
Free returns set expectations that are hard to reverse. Tightening policies makes sense with rising fraud and costs, but customers have been conditioned to expect convenience without added fees. If the process starts to feel punitive, loyalty will suffer. The challenge is finding a middle ground that protects margins without making returns so frustrating that shoppers will go elsewhere.
Let’s do the math: 9% of returns are fraudulent, and returns are 15.8% of sales. That’s 1.4% of total retail—roughly $76 billion. Significant? Yes. Is this level of alarm worth it? No doubt, the amount warrants attention given the operational costs of processing fraudulent returns—but it doesn’t justify the moral panic or the broad policy crackdowns that punish good customers.
The real story about the returns debate is how e-commerce economics are finally catching up. Retailers used free returns to drive online adoption. Now, reverse logistics are crushing margins, and fraud makes a convenient villain for policy tightening.
The better play: transparency over fear tactics. Consumers will accept modest changes—shorter windows, loyalty tiers, in-store return incentives—if retailers are honest about costs. But when 57% say they’ll abandon retailers after being charged for returns (up from 40%), that signals eroded trust that cannot be ignored.
Frame tightening policies as protecting profitable customer relationships, not punishing returns. Lead with explanation, not surprise fees. Because the retailers losing customers aren’t the ones with stricter policies, they’re the ones who implement them without warning.
This comes up so much – because it is a massive margin killer. Customers have been talking to me about this for at least 10 years and the issue is not going away.
I have seen some shocking policies over the years – at both extremes.
However, adding some friction for the customer does seem to make sense – making it more difficult for the customer and the reality is the more retailers do this the more it will become perceived as ‘the norm’ potentially making customers think twice before pressing ‘buy now’.
Free returns should not be a margin killer, let alone a massive margin killer. The cost of returns should be baked into the P&L, and the top line should be adjusted to accommodate it.
This discussion bifurcates when the sales are complete. The sale is not complete until the customer is delighted. It doesn’t end when it is rung up on the cash register, nor when it is shipped out of Amazon’s warehouse.
The objective is not to sell the product; it is to satisfy the customer. If a retailer satisfies a customer, the customer will return again and again. That is retail success.
Exactly this. Embrace the truth that the customer journey starts with early consideration, well before actual shopping, and goes past the point of purchase to where the customer is actually using, tasting, or wearing the product. Make sure to remove friction and hassles on this full journey, even to delight the customer. Do this, and sales and profits will take care of themselves.
I have always considered liberal return policies, including free shipping or instant refunds, to be part of a retailer’s value proposition, marketing, and retention strategy. Evidence has shown inconclusively that a bad return experience will do more to destroy a customer relationship than almost any other experience. The bottom line is that retailers need to approach their policies from the perspective of their customers while limiting exposure to fraud and theft. This isn’t an easy road to walk.
At the same time, return policies are always going to be driven by the market. If the industry decides that it’s just too expensive to offer this service, and major players start tightening down their policies, customers will change their expectations. Until someone decides that liberal return policies are a differentiator that will drive business, then the pendulum changes direction and we’ll be right back here talking about this again in 2027.
Most consumers are reasonable and understand that free returns are a privilege rather than an entitlement. Retailers need to protect themselves from fraud without compromising the customer experience.
Certain retailers are adopting more nuanced solutions: If the customer made an error, they pay a return fee; if the product is defective, they receive a free return.
So many great points on returns today. It’s not rocket science: Return policies must be clear, consistent, and fair to both retailer and consumer. If customers’ like a store, they’ll adapt to a fair policy.
Free returns as a customer acquisition tool? Absolutely. As an open-ended standard operating procedure? Nope. As a loyalty reward to a long time frequent purchaser? Sure, let the customer know you appreciate the magnitude of their business. Free returns to an obviously abusive customer? Absolutely not. In fact, don’t even process their order, and tell them exactly why.
Free returns made abundant sense 20 years ago, and Amazon made sure it became table stakes. And customers quickly demonstrated how they viewed the combination of “free” and convenience. It led to a lot of lazy, inconsiderate shopping, while everybody fought for market share in the often unprofitable ecomm business. But hey…customer acquisition and market share. It’s time for the pendulum to get back to a more reasonable position.
Retailers have the right to close costly loops on return abuse. But adopting more restrictive return policies or applying fees across the board will impact the vast majority of legitimate and honest returns.
Retailers considering restrictive return policies are well served to first look inward, asking customer-centric questions around the shopping experience:
Were customers rushed to purchase because they couldn’t find team members in our stores to answer questions?Did we do our part to adequately educate and inform the customer in signage and labeling around sizing and materials?Did we provide a good online experience where customers could easily find answers, read reviews from other customers?Did we bother to ask our customers what else they wanted to know or learn about their purchase at checkout?Did we follow up with the customer post-purchase to ask specifics about what they liked/didn’t like?Making the customer happy is a journey from start to finish. Satisfied customers come back to the retailer because they feel valued, understood.
Retailers are rethinking their return policies as costs and fraud continue to rise, but they need to avoid damaging customer trust in the process. Free returns became an expectation during the years of online growth, and changing that too quickly can feel unfair. The goal should be to make return policies clear, consistent, and reasonable, rather than making customers feel punished.
Technology can help reduce returns before they happen. Better product data, accurate sizing, and real-time inventory visibility improve order accuracy and lower return rates. Retailers that balance cost control with transparency and empathy will keep customer loyalty even with stricter policies. Returns are not only a cost issue to fix but a customer experience challenge to manage.