Recent findings from consumer group Which? highlight a pressing reality for online fashion retailers: over half of the largest brands are no longer offering free postal returns. This significant shift is aimed at addressing two critical hurdles: the rising operational costs associated with returns and the growing issue of ‘serial returners’ who exploit free return policies.
Gary Winter, Vice President of Global Strategic Initiatives at Quadient, emphasized the financial strain that returns impose on retailers. According to Winter, every return incurs an average cost of approximately GBP £20. This expense covers everything from unpacking items in warehouses, to inspecting products, and finally, restocking them for sale. Given the pandemic’s influence on online shopping, this issue has only intensified.
One of the often-underestimated aspects of this problem is what Winter refers to as the ‘ick factor.’ This term captures the discomfort that consumers feel about wearing items previously tried on by multiple individuals. By instituting charges for returns, retailers aim to change consumer behavior and manage this psychological barrier. A well-thought-out return policy can enhance both customer satisfaction and operational efficiency, with features such as convenient parcel locker drop-offs improving the return experience while also keeping costs in check.
Dean Standing, Chief Customer Officer at Sagacity, noted the rising pressures associated with servicing retail returns. The phenomenon of ‘buy-and-bail,’ where consumers make purchases with the intent of returning the items, has increased costs for retailers in a time when profitability is paramount. Standing advocates for a data-driven approach to returns management and customer operations; understanding the demographics of serial returners can help retailers establish policies that support profitability without alienating valuable customers.
Communication plays a vital role in this process. Retailers must tread carefully when altering return policies, as poorly managed changes can lead to dissatisfaction among customers. Case studies from PrettyLittleThing and BooHoo demonstrate how abrupt shifts can lead to negative consumer reactions. Finding the right balance between return costs and customer loyalty is essential for sustainable growth. By using customer data effectively, retailers can tailor their return strategies to align with actual consumer behaviors, enhancing their overall service delivery.
In addition to financial pressures, fashion retailers are increasingly facing sustainability challenges. Research by ethical fashion not-for-profit Collective Fashion Justice highlights that less than 4% of British Fashion Council members have set any climate targets, in stark contrast to 44% of other UK businesses. This discrepancy casts a spotlight on the need for fashion brands to prioritize sustainability, particularly as platforms like London Fashion Week draw attention to these issues.
Vishal Patel, Vice President of Product at Ivalua, underscored the complexities involved in tracking carbon emissions throughout the supply chain. Fashion brands often work with thousands of suppliers across diverse geographical regions, making it difficult to ensure compliance with sustainability regulations. The majority of a brand’s emissions may stem from Scope 3 emissions, which cover the entire supply chain—typically accounting for about 75% of the total emissions.
Patel suggests that fashion brands enhance their visibility and collaboration with suppliers to monitor emissions effectively. By investing in strategic tools that facilitate supplier partnerships, brands can establish specific improvement plans to cut down on emissions, thereby aligning with sustainability demands.
The insights provided by these experts reveal a multifaceted challenge for fashion retailers: balancing the financial impacts of return policies with the need for sustainable practices. As these issues evolve, consumers can expect continued changes in return policies alongside more robust environmental commitments from fashion brands.
This complex landscape highlights the necessity of thoughtful strategies that address both operational costs and sustainability goals. Retailers must act now to adapt to these pressures. With a data-informed approach and a steadfast commitment to ethical practices, they can position themselves not just for immediate profit but for long-term success.
