RETURNS - What the heck?

Returns. Urgh. They hit small retailers and the environment hard, and here's why...

The rise of fast-fashion brands - and their generous returns policies - created a monster that tore through the clothing retail industry. And independent retailers are leading the way in standing up to an unfair, uneconomical and environmentally unfriendly beast, by putting our mouth where our returns policies are.

The likes of ASOS, Boohoo and other fast-fashion outlets made it easy for customers to make impulse purchase decisions, and feed shopping addictions. Their easy returns systems normalised over-buying multiple garments at a time, to pick one for keeping, and return the rest. Buying and returning clothes bought online has become part of the thrill of our shopping culture. It's fun to get multiple deliveries, try them on, maybe even share online with our communities, and then return them after the excitement buzz has waned.

And for the most part, consumers are entitled to have easy returns. It’s only fair that if something doesn't quite fit, isn't the exact same colour as in the photos, or doesn’t meet quality expectations, then we should be able to return it from where it came, right?

Right, sure. But it's gotten so bad that in the UK, customers return £7bn of internet purchases every year, and more than one fifth of all clothes bought online are sent back.

And it’s a pattern of behaviour that’s causing a real economic problem for the retailers that created it. Bohoo blamed an increase in returns for a 94% slump in pre-tax profits. And ASOS last year blamed returns for their significant losses.

Dedicated organisations are monitoring the impact of product returns on the economy. The Product Returns Research Group (PRRG) found that it costs companies £11 to manage the return of an £89 item.

That's a lot of wonga, especially for the little guys like us!

For independent retailers, £11 cost to return an £89 item represents a big hit to our margins. When every sale is an opportunity to cover costs: to pay staff, to chip away at a bill, to invest back into the store, to buy stock, or to deliver marketing so people know you exist. Refunding a payment back to a customer after it has been banked, plus the cost of processing that refund and managing the return, is a direct hit to our cashflow, and an emotional kick in the stomach.

But the costs run deeper than hitting cashflow and causing upset. Our returns culture has created a shadow economy, involving cleaners, delivery drivers, warehouse workers, seamstresses, packaging manufacturers and waste management companies, whose jobs now arguably exist because of the returns phenomenon economy. But at what expense to our environment? 

One major element of the environmental toll of returns is shipping. Transporting returns is estimated to produce 15 million metric tons of carbon dioxide each year. To put that in perspective, that’s about the equivalent of the carbon emissions from 3.2 million cars.

Other environmental factors that are difficult to quantify include the additional packaging required to ship returned goods, and the processes required to return an item to stock (like inspecting, cleaning, and steaming).

And that's even if the item can be resold. Sometimes the lingering smell, the make-up marks, the fabric snags, the tearing, mean that the garment is no longer a 'perfect' product worthy of selling. Optoro estimates that only 50% of returns are good enough to be resold. So where do the remaining, unsellable, 50% of returns end up - you guessed it, landfill probably.

For indies like us, online orders inevitably bring returns. I speak to other boutique owners about this, and we anticipate a 40% return rate on orders from our website, and an even higher rate on orders from our affiliate websites.

At Albion Stores, and from what I see in the returns policies of the boutiques I check in with, we try to minimise the impact of returns as much as possible. We provide 100% recycled and recyclable packaging for our online orders that can be reused for a return. We ask customers to cover the costs of postage, so they hopefully think twice before ordering something they know might not suit them. We won’t accept a return if an item has been worn. And we do as much as we can to describe every product fully before purchase, offering detailed descriptions about the fabric composition, fit and size guides. We ask customers to provide valid reasons for their return. Plus, we have an online chat service for customers with specific queries. But it seems that no amount of preparation can stop online returns completely. That return reason we all dread is “it simply doesn’t suit me” - and there’s no amount of prep we can do to fix that.  

But we have drawn a line with in store purchases. We updated our Returns Policy last year to say that customers can no longer return items bought in store for a refund. Instead we offer an exchange or store credit only for items bought in store. We think that if someone has spent time in our store, trying a garment on, considering it, getting honest advice and feedback from ourselves, and made a decision to purchase, that it's only fair that contract between us and the customer is upheld. We will do our best to ensure our customers make the best decisions and know the best methods of caring for the garments purchased. In return, we expect our customers to only purchase something they absolutely love, want and need.

It seems the big guys are deciding to change tack too. In May last year, Zara announced that it would be charging a fee of £1.95 for customers to return clothing bought via their online store. And Boohoo too now charges customers to send back items as the industry shifts to recoup the accelerating fulfilment costs involved in online returns.

But are these minimal charges enough to change behaviour? Perhaps retailers should charge £11 for every £89 spent to return an item to really deter flippant purchase decisions?

We’d love to know what you think.