Retailers Bet on AI Fitting Rooms to Slash Costly Returns Online shopping has revolutionized the way consumers buy clothing, offering convenience and ease of return. However, for retailers, the process of managing returns has become a significant financial burden. Returns require retailers to bear the costs of retrieving garments that do not fit, inspecting them, and deciding their fate, often at a loss. To address this challenge, virtual try-ons powered by generative artificial intelligence are emerging as a promising solution. According to the U.S. National Retail Federation, 15.8% of annual retail sales were returned in 2025, totaling $849.9 billion, as reported by CNBC. For online sales, the return rate climbed to 19.3%, with Gen Z shoppers aged 18 to 30 averaging nearly eight online returns per person last year, according to the same NRF data. This trend highlights the growing problem of fit uncertainty, which drives both returns and abandoned shopping carts. Ed Voyce, founder and CEO of AI startup Catches, told CNBC that uncertainty over fit is the primary driver of these issues. Most returned items rarely make it back to shelves, and the cost of processing them often exceeds the value of the refund. The NRF data further reveals that 82% of consumers consider free returns essential, yet the financial strain of providing them is becoming unsustainable for many brands. Simeon Siegel, senior managing director at Guggenheim, emphasized that proactively minimizing returns can significantly boost profitability. Siegel noted that AI-generated visuals, now deliverable in the cloud at low costs, offer brands a viable return on investment. Retailers are increasingly integrating generative AI virtual try-on technology into their platforms.#google #shopify #zara #asos #nrf
