The returns challenge for fashion was exacerbated over the Christmas period and is rising in line with online growth. How can retail tackle the issue head-on?

  • As Covid restrictions end, a spike in occasionwear for weddings and parties has led to an increase in returns
  • Retailers such as Asos, H&M and Gymshark are using AI fitting tools with the aim of a ‘frictionless returns experience’
  • Easy returns are a key motivator for consumers, so penalising serial returners must be done with care 

Returns have always been a pain point for retailers, but they have become even more of a problem over the past few years.

While the pandemic spurred an online boom, an influx of orders has subsequently left many retailers with a surge in returns.

Boohoo screengrab

Boohoo cited elevated return rates when issuing a profit warning

Coupled with changing dressing habits and fluctuating sizes across different retailers, the issue has recently come to a head. Even the most stellar lockdown performers, such as Boohoo and In The Style, issued profit warnings that flagged elevated return rates from customers as a key factor.

According to fashion AI firm Dressipi, average return rates between August and October 2021 were up 1% compared with the same period pre-pandemic in 2019 – equating to 90 million more returns in 2021 compared with 2019. And that number is set to reach 121 million in 2022.

In terms of sheer volumes, returns specialist ReBound believes returns were up 44% in 2021 compared with the previous year.

Moreover, KPMG estimates that returns cost retailers £7bn per year and is only going to rise.

Retail Week explores whether the industry has reached peak returns and what can be done to solve fashion’s biggest headache.

Going ‘out out’

As UK shoppers get used to a new sense of normality, so too have their fashion choices – most notably, the return of occasionwear to the mix.

While analysts and retailers alike have reported that the general casualisation of fashion is a trend that is here to stay, many consumers have recently splurged on going-out clothing, which in turn brings new issues with sizing and returns.

“Our behaviour has swung back. The return rate is higher than it was in 2019 – you’ve got that splurge of people going out”

Sarah McVittie, Dressipi

“What happened over the last two years is a kind of Covid silver lining where the return rate dropped massively because everyone was buying leggings and tops, and fewer dresses,” explains Dressipi co-founder Sarah McVittie.

“In the last year, our behaviour has swung back and we’re buying more of those higher return-rate products. We’re seeing that the return rate is higher than it was in 2019 – you’ve got that splurge of people going out.”

Data from ReBound supports this: formalwear returns spiked in the summer months as weddings returned and in December when Christmas parties were both planned and cancelled.

Changes to return rates through 2021 

MonthReturns rate

























Data from ReBound

“Formalwear has always been a really challenging segment for retailers because their rates run so much higher,” explains ReBound returns specialist Laura Gee. 

“For an evening gown, 60% of those would typically be returned because the shape is a lot more structured, it has more zips or fastenings and customers are spending more money on them less frequently so they’re pickier about what they want. 

“If you buy one and don’t buy another until a year or two later, then your sizing and style have most likely changed.” 

This problem was exacerbated over the Christmas period. Boohoo said returns rates were 12.5 percentage points higher in the three months to November 30 than the previous year and seven percentage points higher than pre-pandemic levels due to an “exceptionally high dress mix”.

In The Style said it experienced “higher than anticipated” returns rates, following a “swing in customer demand towards occasionwear and away from the less ‘fit-sensitive’ casual ranges”.

Asos, on the other hand, said that its returns rates were normalising to pre-pandemic levels.

An Asos spokesperson says: “What we have seen is that, since the easing of Covid-19 restrictions across the world, our returns rates have largely normalised back to pre-pandemic levels on a product-category basis. For example, our going-out wear returns level has broadly returned to pre-pandemic levels of returns.”

While this swing back was inevitable, it has caught some retailers off-guard. Now the category mix has balanced out, retailers need to focus on the root causes of returns more than ever.

Tackling the problem

Some of the reasons for returns are uncontrollable. People just change their minds or they bought an outfit for an event that was then cancelled. But there are some issues that can be understood and dealt with head-on. 

To understand the ‘why’, retailers need to better harness the vast amounts of returns data they hold.

“Is it customer-based? Is it certain products with certain features? Are people buying multiple options of the same category, ie: three dresses and sending two back? Or are they buying the same product in at least two different sizes?” suggests McVittie.

According to Dressipi, typically 10% of items sold are multiple-size purchases, while between 10% and 20% of returns are sizing-based.

“The other option is style – is the customer buying multiple options of the same category so they’re wardrobing at home?” she says.

“That’s typically a larger chunk of purchases and a larger chunk of returns that can be preventable.”


Asos is utilising technology in an attempt to reduce returns

By delving deeper into product categories and specifications to understand what works and what doesn’t, retailers can then feed this back to their buying and merchandising teams.

Technology can also be harnessed to tackle sizing issues and ensure that customers buy the right size the first time around. 

Retailers are beginning to invest in AI and AR technologies to help standardise sizing and reinforce a purchase decision.

Asos, for example, has created an AI Fit Assistant tool – a size-recommendation tool that offers customers personalisation by recommending them a size based on what similar shoppers have bought and kept.

“Fit technology apps are going to become more common but one of the challenges is going to be standardising them. I don’t want to upload my measurements to 45 different retailers”

Kelly Askew, Accenture

Asos, along with peers such as Marks & Spencer, has also introduced reviews on its website to give detailed customer feedback on sizing.

H&M, Gymshark and Puma have begun experimenting with avatars to help customers try on clothes virtually, while there is scope for the metaverse to offer a virtual fitting-room experience.

Accenture managing director of strategy Kelly Askew says: “These apps are going to become more common but one of the challenges is going to be standardising them.

“I should be able to have a virtual representation of my physical shape that allows me to overlay the digital representation of physical clothing or items, so I can see exactly what they look like – but the ecosystem of retail needs to get together on this. 

“They will need to agree on some standards because I don’t want to upload my measurements to 45 different retailers, I just want to have a standard I can try across all the different retailers.”

The catch-22

Ease of returns is one of many reasons a consumer will choose to shop with a particular retailer, especially if ordering online. But could making returns easy actually be doing retailers more harm than good? 

Askew, McVittie and Gee all agree that this comes down to the profitability of each individual shopper on a case-by-case basis – something that can be measured using the data gathered when customers make online purchases and returns.

“Most retailers get 15% to 17% of their returns from 0.3% to 0.5% of their customers. When you look at your customers, you need to understand who is profitable and who is not – there’s some that you’d just rather not even have their revenue because they’re so unprofitable,” explains McVittie.

She suggests that retailers should simply remove these serial returners from the customer relationship management (CRM) system and stop incentivising them to come back and spend more money if they are not going to provide a profitable enough revenue stream. 

“It’s a bit of a catch-22 for retail – if you want people to shop online versus elsewhere, you want it to be easy to return” 

Kelly Askew, Accenture

Some retailers such as Asos have begun banning serial returners, while the likes of Next and Hollister have introduced charges to discourage customers from over-returning.

Askew thinks this is the wrong way to go, however.

“It’s a bit of a catch-22 for retail – if you want people to shop online versus elsewhere, you want it to be easy to return. 

“The whole notion of returns labels and free returns is going to become mandatory for retailers, and that will have a downward impact on their profitability as they try to figure it all out. 

“I think the wrong way to do this would be to make it harder to return or less pleasant to return – thematically, a carrot is far better than a stick in terms of limiting returns.”

“Shoppers are pretty savvy. Are marketers therefore guilty of driving up their own returns rates?”

Laura Gee, ReBound

The key issue with free returns is that it allows shoppers to sometimes take advantage of promotions without fully reaching the requirements.

Gee suggests retailers should look at their own marketing departments for driving up returns.

“Could encouraging sales promotions increase their returns rates?” she asks. 

“Sending out a £10-off-your-next-order voucher after you’ve just placed an order, for example – shoppers are pretty savvy. They can order that same order again, use the £10-off voucher and send back the full-price order basket. 

“For things such as spending an extra £5 for free delivery, if you team that up with a free returns proposition, shoppers can again add an extra item, get their free delivery and send it back for free. Are marketers therefore guilty of driving up their own returns rates?”

While not all shoppers may behave this way and Gee warns against “penalising the many for the sake of the few”, it is important that retailers understand the consequences of their own actions before playing the blame game.

Beyond the financial implications of elevated returns rates, sustainability is also a key concern for retailers and consumers.

Rather than banning or removing certain capricious shoppers, Askew suggests retailers try to educate consumers on the impact of their shopping and serial returning habits to allow them to make a more informed decision about what to buy.

A generational issue?

It is worth noting that fast-fashion retailers such as Boohoo and In The Style, with a largely younger target shopper, are those flagging returns as a major issue, while the likes of Sosandar and N Brown report returns below pre-pandemic levels.

Seasalt store Falmouth

Seasalt says its returns generally go down with customer familiarity

N Brown retail chief executive Sarah Welsh says while returns rates have increased as consumers switch back to shopping for occasionwear and footwear, levels remain low given its specialist sizing capabilities.

“Over the past few months, our customers have returned to buying clothing and footwear products, which have naturally higher returns rates, as they looked forward to restriction-free socialising again,” Welsh explains.

“As a result, we have seen a naturally higher rate of returns as the product mix shifted. 

“Despite the recent rise, our returns rate remains lower than pre-pandemic levels thanks to the time we have spent over the last 18 months to focus on ensuring our product ranges are as relevant and inclusive as possible, not least through our digital fit capabilities.”

N Brown’s investment in sizing has in fact led to an underlying reduction in its returns rates of 4% compared with 2020.

“We make clothes in a broad range of sizes that fit and flatter customers,” says Welsh.

“This is a significant skill as it requires securing samples on a range of sizes, not just ‘scaling up’, and understanding how body shapes change as dress sizes do.

“For most retailers, their returns rate for the larger sizes would be slightly higher as there is a greater likelihood of an item fitting poorly. At N Brown, it is the opposite – something that reflects our specialism in this field.”

“We have seen a marginal rise in returns in recent months and we believe new customers getting acquainted with our fit is part of the explanation”

Will Charnley, Seasalt 

Cornwall-based fashion retailer Seasalt, meanwhile, tells Retail Week it saw higher returns rates over recent months but attributes this to a swathe of new customers acquired during the period.

“We have seen a marginal rise in returns in recent months and, while we are looking at the reasons behind this, we believe new customers getting acquainted with our fit is part of the explanation,” says chief sales officer Will Charnley.

“Seasalt’s fit is very distinctive, which is something our customers love. As our new customers get comfortable with our fit, typically their returns go down.”

Seasalt’s appeal is to a slightly older core demographic, which Charnley says purchases with more intention and a view to making things last.

“While our customers do, of course, return products, we find that they are less likely to buy multiple items and return most of them. They find their style and know they will love it for years to come,” he says.

Interestingly, unlike its youth-oriented counterparts, Seasalt has seen higher returns rates in casualwear than in formalwear and workwear, but this likely reflects its product mix.

With the online boom continuing, returns volumes may still rise but rates will slow down if retailers can act now to mitigate the causes. The fact that a product is not a sale until it is kept must be front of mind.

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