Returns continue to be a pressing issue for retailers and brands, as they not only have a detrimental impact on the environment but also affect profitability. Two recently published reports provide insights into the problem of returns and offer recommendations for improvement. The British Fashion Council’s Institute of Positive Fashion (IPF), in collaboration with DHL and Roland Berger, conducted a study on the environmental consequences of returns in the fashion industry.
According to the report, returns in the UK resulted in 750,000 tonnes of CO₂ emissions in 2022, with approximately 23 million garments ending up in landfills or being incinerated. This means that around 75% of returned items cannot be resold. The study identified incorrect sizing or fit (93%) and product quality not meeting expectations (81%) as the main reasons for returns.
To address this issue, both reports emphasize the importance of retailers getting sizing right, enabling consumers to confidently select items that will fit them. The BFC’s IPF suggests that fashion businesses should be more intentional about the products they sell, creating collections that customers will want to keep. Additionally, they should utilize data and digital solutions to empower shoppers to make informed purchases.
The introduction of sizing calculators and digital avatars is seen as a potential solution to reduce returns and associated costs. Roland Berger estimates that retailers relying heavily on online sales could decrease returns handling costs by 20%-40% by implementing these tools. The reports also suggest that free returns may no longer be commonplace, as more companies are implementing returns fees. While this may discourage some customers, it is likely to become the industry standard.
However, retailers must strike a balance when implementing returns fees, as making the returns process difficult for customers could have a negative impact on business performance. Furthermore, the reports highlight the importance of optimizing reverse logistics processes to reduce costs and meet carbon emission targets. This involves investing in technologies such as digital product passports and automated warehousing to make returns operations more efficient, cost-effective, and environmentally friendly.
Another study conducted by the Retail Technology Show (RTS) found that 32% of UK shoppers believe retailers should not ban serial returners, despite the increasing costs and environmental impact associated with excessive returns. A significant portion of consumers (26%) believes that retailers should take responsibility for preventing returns in the first place instead of banning serial returners. Currently, the average shopper returns 15% of their online purchases, with higher rates among Millennials (20%) and Gen Z shoppers (22%).
It’s worth noting that offering free returns is a crucial factor for consumer loyalty. According to a Klarna poll, 71% of UK shoppers would not shop with a brand or retailer that does not offer free returns. Loyalty is further reinforced by the fact that 86% of consumers are more likely to return to online merchants that provide free returns. This presents a challenge for retailers like Zara, Next, Boohoo, THG-owned LookFantastic, and Mountain Warehouse, which have recently introduced returns fees.
As retailers grapple with the returns dilemma, finding the right balance between reducing returns and maintaining consumer satisfaction is paramount. Efforts to improve sizing accuracy, leverage technology, and optimize reverse logistics processes can help address this challenge. Retailers must adapt to evolving consumer expectations and environmental concerns to remain competitive in the market.
Useful links:
– British Fashion Council’s Institute of Positive Fashion
– DHL: E-commerce – The Sustainability Challenge
