As we approach party season where many a sequin skirt, velvet dress or luxe tailored suit are deemed the most suitable seasonal Christmas uniform, it prompts me to dive into the controversy, costs and challenges of our guilty habit as consumers – fashion returns.
Are you a serial returner? Buy five pairs of jeans to return all five? Order 36 swimsuits to only keep the bottoms of one bikini? “I’ll order it all and return the rest” is a throwaway statement, the majority of us have made. But, have you ever stopped to consider what actually happens to these returns when they reach the warehouse? The environmental cost of continuously ordering and returning on a whim because you fancy a little lunch time browse? Many an article has traced and unravelled the journey of how these garments arrive at our front door – but where does this journey lead to after we post these packages?
Exploring reverse logistics of the fashion industry in recent years sees a return tsunami for household names as omni channel retailing, in particular e-commerce platforms have increased exponentially.
A pre-requisite to a smooth online shopping experience is the promise of complimentary returns however, the extent to which this has encouraged our lax uptake of chronic ordering at the expense of not only the environment but businesses is considerably high. One would seek to argue that whilst being harmful for the environment, it is also detrimental for business as many do not yet have the inventory management capabilities, technological capacity or warehouse infrastructure to handle the nuances of the increased quantities of our returned apparel and accessories. This piece engages with the current level of returns, its effect on businesses and the planet as well as providing suggestions on how retailers and consumers can mitigate the fall out of our fondness for fashion returns.
At a glance
The global online fashion market was worth $533 billion in 2018, and is predicted to grow to $872bn by 2023 so what state of play does this leave in regards to returns? Unsurprisingly due to the cruciality of fit and style, clothing is the most returned sector. Online sales account for the highest return rates in the apparel world, and whilst you might think that online shopping has taken over, it still only accounts for 10% of apparel purchases but is set to grow exponentially.
To paint an accurate picture, here are some figures on the current state of play from various sources I have found during my research:
- On average a woman won’t return items under £8.56 while men won’t return anything under £15.70
- Online returns are expected to reach £5.6 billion by 2023 with the fashion sector being the hardest hit
- Free returns are common across most sectors and consumers have come to expect this, with 72.9% of online shoppers agreeing that they wouldn’t order from a retailer if they had to pay for returns
- 25% of stores said they’d experienced an increase in returns over the past two years
- Three quarters of clothing returns came from women and young shoppers, who are far more likely to send items back than older generations
- 62% “would buy again” from a brand offering free returns or exchanges (Dotcom Distribution, 2018)
- 69% are deterredfrom buying online by having to pay for return shipping and 67% by restocking fees (Narvar, 2018)
- 90% “highly value” free returns (Dotcom Distribution, 2018)
- 96% would shop with a retailer again based on an “easy” or “very easy” return experience (Narvar, 2018)
- In the US alone, customers return approximately 3.5 billion products, of which only 20% are actually defective according to Optoro, a company which specialises in returns logistics.
In focus
Returns are bad for business
Primarily, returns are bad for business, you don’t have to be a business analyst to conclude that serial returners hurt margins. In the midst of the current retail climate, the struggle to make profits and attract customers is rife as store closures in the UK hit record levels. According to PwC and the Local Data Company (LDC), the first half of 2019 saw an average of 16 stores a day closed between January and June. These are the lowest in a decade and fuelled by cost pressures as well as altering consumer purchasing patterns. Over 30% of retailers have increased their prices to account for the squeeze on profits created by soaring online returns.
Additionally, figures from Barclaycard demonstrate that for over 50% of the nation’s credit and debit card transactions, a quarter of retailers have seen returns increase over the past two years.
There is also news that online returns are predicted to cost UK retailers £20 billion a year. Whilst this number varies as in a study by Clear Returns, a retail data technology company, they recently estimated that returns cost UK retailers around £60 billion a year. The pattern is not dissimilar over the pond as for US companies, according to Apriss reports, merchandise returns are accounting for close to $369 billion in lost sales. This poses the question, if our return habits become embedded in shopping practice, to what extent can the fashion and retail industry truly create profit and stimulate economic value for its stakeholders?
Returns are harmful for the planet
Subsequently, one must look to the impact of increasingly frequent reverse logistics with our environmental and waste savvy lenses.
Transportation of our travelling garments from our home or the store to their warehouse of origin create a glaringly obvious challenge on the topic of reducing our greenhouse gas emissions. For example, ASOS has said it emits the equivalent of 3.8 kilograms of carbon dioxide per delivery. Its total emissions were 236,720 tonnes last year.
Interestingly, a study from the Energy Saving Trust found you’d have to buy 24 items in a shop to make your drive there and back equal to the carbon footprint of one item ordered online, a statistic that may make one or two of us face palm. Calculating your individual footprint is often done for plane or long haul travel journeys but using sites such as Terra Pass, consider the distance and journey of your favourite retailers warehouse to your home and back again!
The fundamental fall out from this is that according to Optoro , the world’s leading return optimisation platform, £5 billion of waste is generated through returns each year, contributing 15 million metric tons of carbon dioxide to the atmosphere. The returns system is horrendously inefficient according to Carly Llewellyn, Senior Director of Marketing at Optoro: “Historically the way retailers have handled returns is they get a bunch of items back to a store or warehouse, usually they’ll sit for several months because they don’t have tech to know what to do with them, eventually they’ll go to a wholesaler or liquidator, through all these middle men to try and resell them. It’s bad for environment – as items are shipped around the country so much – and bad for retailers who make hardly any money.” Tapping into technology for inventory management purposes will prove essential in the future.
As we approach the seminal and frightening pinnacle of consumer discount events, Black Friday returns are predicted to cost fashion retailers £1.6 billion pounds, according to returns management platform ReBound Returns. Their research has also revealed that the UK retail sector could endure return prices totalling £2.4 billion due to a spike in returns activity between Black Friday and Christmas Day.
Companies helping to alleviate the problem
With the implications for the environment and retail economy in mind, a number of companies are endeavouring to alleviate and mitigate the challenges of fashion returns.
Take for example, The Renewal Workshop, a leading provider of circular solutions for apparel and textile brands. They are an organisation that has partnered with the likes of North Face and Martha Hoffman to implement a renewal system that upcycles retailers returned items. Their use of data to collect information on everything that flows through the system is fed back to their retail partners to aid them in remodelling their production and design of future products, thus assisting with inventory management! What’s more, the zero-waste system recovers the full value of items created by their partners.
Another organisation using data to reduce return rates and improve sustainability is Bold Metrics. Working with the likes of Levi’s and G star, through its mission they have decreased rates by 20% through utilising machine learning technologies.
They couple data to alter the methods by which brands design and manufacture clothes to increase their environmental responsibility.
Integrating intelligence and data is crucial in the case of rectifying the returns situation in the fashion, footwear and accessories sector as it enables retailers to better understand personalisation of products and services to a client’s body shape and size. By unlocking this, they are able to meet consumers dynamic demands when it comes to fit, wearability and personalisation. The positives of personalisation? The more perfect the fit, the more likely you are to keep the item for longer, cherish it and less likely to return! Co-founder of Bold Metrics, Morgan Linton stated
“When you return an iPad it is refurbished and re-sold, but most consumers just don’t realize that when they return clothes, both online and in-store, they can all too easily be contributing to what is quickly becoming an environmental disaster.”
Morgan Linton – Co Founder of Bold Metrics
Final thoughts
For my final thoughts, how to flip this dilemma on its head?
Reconfiguring our attitudes towards the ease of returns with our online purchases is the most glaringly obvious and instantaneous method. Incorporating the 30 wears challenge when purchasing garments and researching the sustainability of brands on delivery options prior to purchasing can mitigate environmental fall out from sending our latest buys packing to warehouses. Even selecting simple choices like click and collect scale down the impacts.
However, the dual responsibility very much lies with the retailers. A fundamental factor in prompting our returns is that more often than not, they arrive not as how they appeared on the website. Thus, brands must work urgently to become more accurate in their online merchandising to depict the products to the best of their ability – how many times have you ordered a dress you believed to be red but may indeed be neon orange, it’s hardly first world problems but it’s all factored into the contention. A recent report revealed that an increase in transparency would encourage 60% of buyers to reconsider the number of purchases they return.
On this tangent, these businesses must take it upon themselves to operate with more accurate and clearer fitting guides as well as develop methods harnessing technology including virtual reality to portray the true appearance of products. We’ve seen the beauty industry practice this with the ability to try shades of lipsticks prior to purchasing on e-commerce platforms and it won’t be long before this translates to clothing. Tapping into technology created through artificial intelligence and blockchain to improve inventory management when these garments have been given back will be crucial.
Holding our favourite brands to higher standards will be imperative in lessening the waste created with returns, which in the long run will also prove more lucrative for their bottom-line figures to reduce the aforementioned issue of ‘serial returners’ costing UK retailers an estimated £20 billion a year. So, as we step into peak Christmas trade, contemplate the contents of your online shopping basket prior to check out, and remember its quality over quantity!
Join hundreds of other readers and subscribe to the monthly S & S newsletter here:
really nice