Why Wealthier Shoppers Return More — And What Investors Should Know Now
A recent Bank of America Institute report reveals a fascinating trend: higher-income shoppers are returning a larger share of their retail purchases than their lower-income counterparts. Specifically, affluent households returned 5.3% of their purchases in 2025, compared to just 3.7% among lower-income consumers. This phenomenon isn’t just a curiosity—it carries important implications for investors and financial advisors navigating the evolving retail landscape.
The “Bracketing” Behavior: A Luxury of Affluence
At the heart of this trend is a practice known as “bracketing,” where shoppers order multiple variations of a product—different sizes, colors, or models—with the intention of keeping only the best fit and returning the rest. This behavior, while not new, is particularly prevalent among higher earners who can afford to speculate on purchases without immediate financial strain.
David Tinsley, lead economist at Bank of America Institute, points out that this speculative buying is easier for wealthier consumers who aren’t as cash-strapped. Edgar Dworsky, consumer advocate and founder of ConsumerWorld.org, notes that bracketing has thrived in the e-commerce era, where shoppers cannot physically inspect items before purchase. Online shopping’s “blind” nature encourages ordering more to hedge bets.
Returns Are Soaring — And Retailers Are Feeling the Pinch
The rise in returns is dramatic. According to a 2024 Optoro report, nearly 46% of consumers return items multiple times monthly—a 29% jump from 2023. This surge translates into a staggering $890 billion in return-related costs for retailers in 2024 alone, or roughly 16.9% of annual sales, per the Bank of America report.
Retailers are responding by tightening return policies—66% began charging for some return methods in 2024, and many have shortened return windows. These measures are crucial as rising tariffs and supply chain costs squeeze profit margins further.
What This Means for Investors and Advisors
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Retail Sector Volatility: Investors should anticipate continued volatility in retail stocks, especially those heavily reliant on e-commerce. Retailers with flexible, customer-friendly return policies may sustain loyalty but face higher costs, while those tightening policies risk alienating consumers. Watch for companies innovating in return logistics or leveraging AI to reduce speculative buying waste.
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Opportunity in Returns Management: The explosion in returns creates a booming market for returns management companies like Optoro. These firms help retailers recapture value by reselling returned goods or optimizing logistics. Investors might consider exposure to this niche, which benefits from the ongoing retail returns surge.
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Consumer Credit and Payment Solutions: As returns grow, credit card companies offering robust return protection perks could gain a competitive edge. However, these perks are becoming rarer and more restrictive. Financial advisors should educate clients on leveraging credit card protections wisely and understanding fine print to minimize loss.
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Behavioral Segmentation: Understanding the income-linked return behavior can guide targeted marketing and product development strategies. For example, luxury brands might embrace bracketing as a feature, offering seamless returns and exchanges, while value brands focus on minimizing returns through better product information and sizing tools.
What Should Shoppers and Advisors Do Differently?
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For Shoppers: Before buying, invest time in reading verified customer reviews and return rate flags (Amazon’s “keep vs. return” indicators are a prime example). Check the retailer’s return policy carefully—77% of shoppers do, per a 2024 GoDaddy report—and prefer merchants with flexible, transparent terms.
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For Advisors: Counsel clients to use credit cards that offer extended return protections but stress the importance of understanding the limitations. Encourage clients to adopt a more deliberate purchasing approach to reduce hassle and financial friction from returns.
Looking Ahead: The Future of Retail Returns
With tariffs and inflationary pressures unlikely to ease soon, retailers will continue to tighten return policies. However, consumer demand for easy returns remains high—76% say free returns influence where they shop (National Retail Federation and Happy Returns, 2024). This tension will push retailers to innovate in areas like virtual try-ons, AI-driven sizing recommendations, and smarter inventory management to reduce return rates without sacrificing customer satisfaction.
A unique insight: Investors should watch for emerging tech startups focused on “returnless refunds,” where customers receive refunds without returning the product, reducing logistics costs but shifting risk. This novel approach could disrupt traditional retail models and create new investment opportunities.
In sum, the intersection of income-driven consumer behavior, rising returns, and tightening retailer policies is reshaping the retail ecosystem. Savvy investors and advisors who understand these dynamics and anticipate innovations in returns management will be best positioned to capitalize on this evolving market.
Sources:
- Bank of America Institute Report, 2025
- Optoro Returns Report, 2024
- National Retail Federation & Happy Returns Survey, 2024
- GoDaddy Consumer Report, 2024
- Bankrate Credit Card Return Protection Analysis, 2024
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Source: Why wealthy shoppers generate more retail refunds