Retailers can no longer afford to treat returns as a back-office burden. Returns are a strategic lever – and when powered by AI, they can become a competitive advantage.

At Kyndryl, we’re helping retailers reimagine returns as part of a broader, intelligent supply chain. The key is to start upstream. AI can help predict return likelihood at the point of sale by analyzing historical behavior, product attributes, and customer sentiment. This insight enables retailers to proactively adjust sizing recommendations, product descriptions, and even packaging – reducing the chance of a return before the item ever ships.

But when returns do happen, speed, sustainability, and protecting profit margins matter. AI-driven reverse logistics engines can dynamically route returned items based on real-time data, whether to refurbish, recycle, or recommerce. This not only cuts costs but supports ESG goals, which are increasingly influencing consumer loyalty.

We’re also seeing retailers use AI to personalize the returns experience. Think AR tools that help shoppers visualize replacement products in their space before the exchange itself, or intelligent chatbots that guide customers through the return process with the ability to offer alternative options and identify upsell opportunities along the way. These technologies reduce friction and build trust.

Ultimately, the most successful retailers are those who treat returns not as a loss, but as a learning loop. By embedding AI across the returns lifecycle from prediction to processing, they’re not just protecting margins. They’re enhancing the customer experience and building smarter, more resilient operations.