"Silent Killers": How AI Is Revolutionizing Retail's Returns Crisis The retail industry is grappling with a persistent challenge that has long plagued its profitability: the staggering cost of product returns. Online returns, which have surged in recent years, are now a multibillion-dollar problem that eats directly into company margins. However, advancements in artificial intelligence are offering a promising solution, with startups leveraging virtual try-on technology to help customers visualize fit and style before purchasing. This innovation is reshaping the landscape of e-commerce, aiming to reduce returns while enhancing the shopping experience. The issue of returns has become a critical concern for retailers, particularly as online sales continue to grow. According to the U.S. National Retail Federation, 15.8% of annual retail sales were returned in 2025, totaling $849.9 billion. For online transactions, the rate jumped to 19.3%, driven largely by Gen Z shoppers, who averaged nearly eight online returns per person in 2024. These returns not only strain operational costs but also diminish profit margins, as many returned items are discarded or sold at a loss. Ed Voyce, founder and CEO of AI startup Catches, emphasized that the problem is now solvable thanks to generative AI. “The reason it’s solvable now in terms of timing is that you have to be able to run visuals for end users on bare metal in the cloud, cheaply enough to make a return on investment for brands,” he told CNBC. Catches has developed a platform that allows users to create a “digital twin” to try on clothes virtually, offering “mirror-like realism” by simulating how fabrics drape and interact with the human body.#antoine_arnault #lvmh #us_national_retail_federation #ed_voyce #catches
