What: Retailers face mounting challenges as 69% of Gen Z consumers engage in over-ordering practices, leading to increased costs and environmental impact from excessive returns.

Why it is important: The rise in return rates, particularly among Gen Z consumers, is forcing retailers to fundamentally rethink their business models, balancing customer experience with operational sustainability and environmental responsibility.

The e-commerce boom has transformed consumer bedrooms into virtual fitting rooms, with 'haul culture' normalising excessive purchasing behaviours. This trend is particularly prevalent among Gen Z, where more than two-thirds admit to over-ordering with the intention of returning items. This practice manifests in various forms, including 'wardrobing' for single-use, 'bracketing' for size options, and 'staging' for social media content. The phenomenon is driven by digital natives' comfort with e-commerce's try-before-you-buy model and the influence of social media platforms, where 15% of UK shoppers purchase items solely for social media display. Retailers are responding with varied approaches, from implementing return fees to using AI-powered sizing tools. Some luxury retailers have taken more dramatic steps, including lifetime bans for excessive returners. The challenge lies in finding solutions that discourage costly return practices while maintaining customer loyalty and addressing environmental concerns.

IADS Notes: Recent data underscores the growing challenges of return culture highlighted in this article. According to NRF findings from January 2024, US retailers faced a staggering $743 billion in merchandise returns, with online purchases showing a significantly higher return rate of 17.6%. This aligns with the article's concerns about Gen Z's return habits, further supported by a Narvar survey from August 2024 revealing that returns cost retailers $25-$30 per item. The sustainability impact is particularly noteworthy, as documented in a September 2024 report on circular retail, which emphasizes the urgent need for retailers to implement better systems for handling returns. The financial strain has prompted major retailers to take action, with Asos introducing charges for frequent returners, while others explore technological solutions. This trend correlates with findings from February 2024 about Gen Z's "split-brain budgeting" approach, suggesting that their shopping behaviour, while digitally savvy, often leads to unsustainable practices in the pursuit of social media content creation.

Haul culture is fuelling returns. What can brands do?