Six Predictions for Retail Returns in the New Year (2026)

The year 2026 is upon us, and for the apparel, fashion, and footwear sectors, it promises to be a defining moment. Facing economic volatility, shifting consumer priorities, and the swift onset of AI reshaping the sector, returns are no longer an unavoidable cost. They are now a strategic battleground for profitability.

At the NRF annual conference this week in New York, the message was clear: returns are being elevated from an operational nuisance to a top-5 executive priority. 

Following are six predictions for how the industry will begin to tackle returns in 2026, and how data-driven solutions like Returnalyze will be essential for success when it comes to dramatically reducing them.

1. Returns-Adjusted Profitability Becomes the New North Star

The focus on top-line growth is over. CFOs and COOs will push for Returns-Adjusted Profitability as the standard metric. Merchandising and eCommerce teams will be held accountable for preventable returns, forcing a direct link between returns data and financial performance.

How Returnalyze Delivers: Returnalyze provides the core engine for this new paradigm, delivering SKU-level insights that impact true returns-adjusted margin. This gives executives the clear ROI they expect from returns prevention investments.

2. AI-Driven Returns Prevention Moves from Theory to Standard Practice

The single biggest operational shift is the widespread adoption of AI and retail returns is one of the fastest beneficiaries of this revolution.

How Returnalyze Delivers: Returnalyze operationalizes AI-driven returns prevention with:

• Automated Root-Cause Analysis: Instantly tying returns to root causes like inaccurate sizing and fit, misleading product pages, quality issues, damages/defects or shipping delays.
• Real-Time Risk Scoring: Leverage data to implement a real-time returns risk scoring capability at checkout for immediate customer experience or fraud detection intervention.
• AI-Generated PDP Improvements: Using returns data to generate recommendations for product page optimization (copy, imagery, fit recommendation notes).
  
  

3. Product Development & Merchandising Will Integrate Returns Data Upstream

To reduce waste and protect margin, returns data can no longer live in a reverse logistics silo. Brands must integrate this intelligence upstream into product development and merchandising, a need highlighted by the demand for greater agility.

How Returnalyze Delivers: Returnalyze acts as the bridge to facilitate:

• Product Development: Incorporating returns into product design optimization and assortment planning strategies
• Returns-Informed Line Planning: Automatically identifying low-performing silhouettes, fabrics, or suppliers to inform design and reduce inventory risk before production starts, achieving true supply chain optimization.
• Supplier Performance: Incorporating returns-adjusted profitability directly into supplier scorecards, creating a clear incentive for quality and negotiation leverage.

4. Retailers Shift From "Free Returns" to "Fair Returns"

To protect margins without damaging loyalty, retailers will implement "Fair Returns" policies. This means adopting tiered return policies (loyalty-based or risk-based) and implementing stricter rules for high-returning customers.

How Returnalyze Delivers: Returnalyze underpins this strategy by providing the necessary risk segmentation. It informs the application of tiered policies and identifies customers or items where stricter rules are warranted, ensuring policy recalibration is data-driven, not arbitrary.

5. PDP Quality Becomes a Battleground for Conversion and Returns Reduction

As retailers face increasing pressure on margin, the product detail page (PDP) is no longer just a conversion tool—it's the first line of defense in returns prevention. Retailers will struggle with consumer expectation-setting due to rapidly shifting trends (e.g., silhouette changes), leading to a demand for significantly higher standards in product presentation and information.

How Returnalyze Delivers: Returnalyze provides the necessary data-driven feedback loop. The platform uses insights from returned items to generate automated, actionable recommendations for product page optimization such as copy, imagery, fit recommendation notes that prevent the next wave of returns before the customer even buys.

6. Reverse Logistics Gets Leaner, Faster, and More Automated

With tariffs and supply chain shifts forcing cost discipline, retailers will invest in making the reverse logistics process a true margin recovery engine. This means a focus on speed, efficiency, and further automation to reduce the cost of handling returned goods.

How Returnalyze Delivers: While Returnalyze is primarily focused on returns prevention upstream, its rich data provides critical intelligence for the logistics team, enabling:

• Operational Troubleshooting: Root cause analysis pinpoints operational failures, such as late deliveries, damages or incorrect items being shipped, providing contextual evidence needed to address inefficiencies at the warehouse or fulfillment level.
• Fraud Detection: Deep customer behavior analytics and visibility into the "why" behind returns helps rapidly identify and mitigate suspicious activity before it escalates into a larger financial threat. 

It’s clear that returns are no longer a back-office function. In 2026, prevention becomes a strategic, AI-powered discipline that touches product, supply chain, customer experience, and finance. Retailers that partner with solutions like Returnalyze will excel by treating returns as a predictive signal, not merely a cost of doing business.

Ready to prevent returns before they happen? Schedule a demo or contact our team to learn how AI-powered returns prevention can transform your business.

Frequently Asked Questions (FAQs)

1. Why are retail returns such a major focus going into 2026?
Retailers are under pressure from margin compression, tariffs, and shifting consumer behavior. Returns are no longer just an operational cost but a direct threat to profitability, making prevention a board-level priority.

2. What is returns-adjusted profitability?
Returns-adjusted profitability measures true margin by factoring in the cost and frequency of returns at the SKU, category, and supplier level. It helps retailers understand which products actually drive profit after returns.

3. How does AI help reduce retail returns?
AI identifies patterns across return reasons, customer behavior, product attributes, and fulfillment issues. This allows retailers to prevent returns before they happen through better product pages, smarter policies, and improved merchandising decisions.

4. What does “fair returns” mean for customers?
Fair returns policies balance customer experience with profitability. Instead of blanket free returns, retailers apply loyalty-based or risk-based rules that reward responsible shoppers while limiting abuse.

5. Why are product detail pages critical to returns prevention?
Poor sizing guidance, misleading imagery, and vague product descriptions are leading causes of returns. High-quality PDPs set accurate expectations and reduce post-purchase dissatisfaction.

6. How can returns data influence product development?
Returns data highlights recurring issues with fabrics, fits, silhouettes, or suppliers. Feeding this insight upstream allows teams to fix problems before products ever reach production.

7. Is returns prevention more effective than optimizing reverse logistics?
Both matter, but prevention has a much greater impact on margin. Eliminating preventable returns reduces shipping, labor, and inventory loss before costs are incurred.