The finding: Retailers expect 15.8% of their annual sales will be returned this year, which translates to about $849.9 billion, per a new report from the National Retail Federation and Happy Returns. That’s down slightly from 16.9% and $890 billion last year.

The context: While the decline is modest, it may reflect merchants enacting policies designed to give shoppers pause before they return items.

• For example, nearly three-quarters (72%) of retailers now charge for at least some returns, up from 66% last year.
• However, those types of policies carry a cost. Nearly half (47%) of merchants that began charging for returns report an increase in customer complaints, 37% lost customers due to their return fees, 34% saw their average order value fall, and 24% saw sales decrease.

The opportunity: Retailers should balance the need to rein in the cost of returns with consumers’ growing expectations for returns—especially considering many shoppers check merchants’ policies before buying.

• 81% of shoppers say free returns are a key factor in purchase decisions, up from 76% last year.
• About three in four (76%) prefer options offering instant refunds or exchanges.

To better serve consumers, retailers are increasingly expanding the return options they offer shoppers.

• 44% still rely on traditional mail returns where shoppers print and package their own labels, up five points.
• 43% of retailers offer buy online, return in store, up 10 points year over year.
• 41% use QR codes for mail-in returns, up nine points.
• One-quarter provide “no box, no label” carrier returns, up eight points.

Together, these shifts show retailers are finding more ways to streamline returns to boost convenience and cut friction.

Our take: Returns are both a challenge and an opportunity.While returns are an inevitable part of shopping, retailers can reduce them by offering richer product details and better visualization tools. A growing range of solutions helps on that front, like Google’s virtual try-on tool that it recently expanded to include shoes.

When returns do occur, convenience is critical. Seventy-one percent of shoppers say a poor returns experience makes them less likely to buy again from that retailer, up from 67% last year. Conversely, 86% are more likely to repurchase from retailers that offer free returns and instant refunds at third-party locations.

At the same time, 36% of US consumers say they won’t return an item if there’s a fee, but that’s not necessarily a win for retailers. It can mean missed insights, lower satisfaction, and a lost chance to make things right and earn long-term loyalty.