Transforming Retail Returns: From Challenge to Opportunity

In today’s fast-paced, customer-focused retail environment, returns have transformed from a routine operational task into a pivotal aspect of the shopping experience. With online sales continuing to climb and U.S. retail sales projected to reach $5.42 trillion by 2025, consumer expectations around returns, including how, when, and where they can be made, have never been higher.

This blog explores the primary challenges retailers encounter with returns and highlights the strategies being implemented to meet evolving customer expectations. Whether your goal is to streamline operations, enhance the customer experience, or future-proof your returns process, this blog offers insights to help you turn returns from a challenge into a decisive strategic advantage.

Changing Consumer Habits Are Reshaping Retail Returns

Returns are an increasingly complex challenge for retailers, especially with the continued rise of e-commerce. According to a report by the National Retail Federation (NRF), consumer merchandise returns in the United States are expected to hit $890 billion this year, representing nearly 17% of retailers’ annual sales. As shoppers become more confident in their ability to return products, return rates are increasing, negatively impacting both profitability and supply chain efficiency.

A major contributor to this trend is “bracketing,” where customers purchase multiple versions of an item with the intention of returning most of them, a practice prevalent among younger consumers. Return policy abuse, such as using items and then returning them, is also on the rise.

To combat this, many retailers are tightening return policies. In 2024, Narvar reported that approximately 25% more retailers began charging for return shipping, while others shortened their return windows, especially those that previously offered more than 30 days. At the same time, advancements in data analytics are helping companies better understand customer behavior and craft smarter, more personalized return strategies.

Rethinking Returns as a Customer Experience Touchpoint

As return volumes grow, retailers are under pressure to manage costs without sacrificing convenience — something today’s shoppers aren’t willing to give up. In fact, 77% of consumers check a retailer’s return policy before making a purchase, and a frustrating return process can quickly drive them away.

This makes the return experience a crucial brand touchpoint. Simple, flexible options — such as no-box returns or instant refunds — can help build trust and loyalty. While returns now account for a significant portion of retail sales, they also present a strategic opportunity: to turn a potential pain point into a lasting customer relationship.

Using Technology to Transform the Return Experience

Technology is reshaping the way retailers manage returns, with automation leading the charge. From enforcing return windows to generating shipping labels and keeping customers informed, modern return platforms streamline the entire process, improving efficiency while enhancing the customer experience.

Shoppers increasingly expect flexible return options, with many preferring alternatives to traditional mail-in returns. Technology is helping retailers bridge this gap, from in-store automated return lockers and kiosks to boxless returns at nearby partner locations. Customers appreciate the convenience; in fact, 70% of customers would use a self-service kiosk, while 67% are open to making a return through a parcel locker. By combining automation with customer-friendly return options, retailers can reduce friction, boost satisfaction, and turn returns into a competitive edge.

Parcel Lockers: A Win-Win for Retailers and Shoppers

Parcel lockers are quickly becoming a must-have for retailers aiming to offer flexible, self-service options for both pickups and returns. By allowing customers to collect orders or drop off returns on their schedule, without waiting in line, lockers add a layer of convenience that today’s shoppers increasingly expect.

Younger consumers, in particular, value these options. A significant portion of Gen Z and millennials have skipped purchases due to a lack of pickup flexibility, underscoring the importance of convenience in the purchasing process.

Beyond customer satisfaction, parcel lockers help retailers streamline operations, reduce labor costs, and support growing demand for free and easy returns. As adoption grows, lockers are proving to be more than just a convenience — they’re a strategic asset that delivers real value on both sides of a transaction.

Driving Locker Adoption Through Education and Incentives

While parcel lockers offer clear benefits for both retailers and shoppers, their success depends on more than just placement — it hinges on customer adoption.

To increase usage, retailers should focus on customer education and visibility. Clear messaging at checkout, in post-purchase emails, and on return pages can help demystify the process and highlight key benefits, such as no lines, no repackaging, and 30-second returns. Incentives can also help to ease adoption. Offering faster refunds or loyalty points for choosing a locker return can motivate first-time users, and once they try it, the convenience keeps them coming back.

By making parcel lockers easy to find, simple to use, and rewarding, retailers can boost adoption, ease in-store congestion, and create a return experience that strengthens customer loyalty.

Turning Returns into a Strategic Advantage

As returns become increasingly complex and costly, retailers must rethink their approach by embracing technology, offering flexible options like parcel lockers, and educating customers to drive adoption. By focusing on convenience and efficiency, retailers can transform returns from a costly challenge into a powerful opportunity to enhance customer satisfaction, reduce operational friction, and build lasting loyalty, ultimately turning returns into a strategic advantage.

Click the image below to download our eBook, The Retail Playbook to Winning Big with Returns, and explore the current state of product returns—and discover how to turn this challenge into a growth opportunity.