This year, we noticed that Australian retailers are less likely to pass on costs and fees to their shoppers and we’ve seen Australian shoppers prefer on-the-spot outcomes such as instant exchanges and instant refunds.
Economic pressures in 2024 led to fewer returns but a rise in exchanges, as shoppers prioritised finding better-fitting alternatives over refunds. Likewise, flexible return options boosted satisfaction and loyalty for retailers this year.
It is likely that with the slow growth and challenging times experienced in 2024, some brands will opt to leverage fees in order to lower their costs.
2025 predictions:
- In-store shopping will continue to be popular
Australian shoppers have historically shopped more in-person after the pandemic than US shoppers. We expect the trend of in-person shopping and Direct-to-Consumer (DTC) brands opening retail locations to continue in 2025, whereas for US brands, brick-and-mortar has been rather hit-or-miss. Instead, we expect to see more US DTC brands opt for pop-up stores, rather than permanent shopfronts.
In the new year, we expect Australian consumers to become more value-conscious, prioritising brands that offer flexible payment options, clear returns policies, and sustainable practices. While both the US and Australia face similar economic pressures, the smaller and more geographically dispersed market in Australia will continue to push for omnichannel strategies – bridging online and in-store shopping experiences.
2. Retail sustainability will gain momentum
Australian brands care a lot about sustainability and have been eager to find ways to reduce their impact on the environment. Loop helps with features like Keep Item and Donate that reduce unnecessary shipping.
As we observe a more global shift toward greener practices in retail, sustainability continues to play a key role in customer loyalty and business strategies, and we anticipate this momentum will only grow in the Australian market in 2025.
3. Returns fraud will increase
Returns abuse is not as prevalent in Australia as other regions, but as shoppers become more accustomed to online-shopping, alongside rising cost-of-living, Australian brands should expect returns abuse incidents to rise in 2025.
Retailers can do a lot to mitigate fraud up front by implementing clear return policies and automating checks and balances at their warehouses.
Australian brands can start tracking the impact of fraud on their bottom line using something like Loop’s Fraud Tools – which use machine learning to flag and reject fraudulent activity before a refund or exchange is issued.
4. Technology trends and innovations predicted to make waves
We anticipate the growing adoption of automated return solutions, which streamline the process for both retailers and customers, as well as AI-driven data, to help retailers identify patterns in return behaviour and optimise inventory management accordingly.
Sustainability will be a continued focus in 2025, and we expect innovations like reusable return packaging and carbon-offset programs to gain traction.
Return management platforms, such as Loop’s Two Boxes solution, integrating directly with logistics providers to automate reverse supply chains and drive efficiency will likely ramp up in 2025.
5. The average cost of items that customers return will rise
The average transaction amount that Australian customers return was $91.78 in2023 compared to $94.52 in 2024.
Given the rising average transaction value in 2024, along with the shift toward quality shopping and eCommerce dominance, it’s likely that the average transaction value for returns will continue to increase modestly in 2025. However, this growth could be tempered by the adoption of return fees and economic shifts.
Australian shoppers are prioritising quality over quantity, investing in higher-priced items, especially in categories like fashion and tech. With higher-value purchases comes a potential rise in returns due to fit, functionality, or buyer’s remorse.
With online shopping continuing to dominate, more consumers are likely to return items that don’t meet their expectations, particularly with lenient return policies encouraging “bracket buying”.
John-David Klausner is vice president of business development & strategic alliances at Loop.