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Comment: Many unhappy returns eat into profit margins

Clothing and footwear returns are rising up the retail agenda, as multichannel shopping continues to grow, not just in the UK, but across borders.

This was the overwhelming message at logistic firm Clipper’s Future Forum: Returns Management event at London’s Cumberland Hotel on June 17. 

Attended by retailers such as Shop Direct, Ann Summers and Barbour, the event focused on the growing challenge returns management presents and what this will look like in the years to come.

Accountancy firm PWC’s director Tom Woodham told attendees that returns are growing faster than deliverables at 10% per year. Clothing and footwear returns were around £2bn in 2014 and are set to rise to more than £3bn by 2019, Verdict has predicted. 

Woodham cited the market research firm’s forecasts that the fashion retail sector will generate the highest year-on-year growth – alongside furniture – at more than 10%. However, he identified key challenges such as fit, which is the main reason for returns, followed by items not being as “good or nice as I hoped”.

With such a high value tied up in returns, and many fast fashion items having a short lifecycle before being marked down, reprocessing stock and getting it back on to the shop floor is vital to improve full price sell through, particularly for best sellers.

This requires the right systems in place to record returns, and the ability to ready them for resale, should they require steaming, pressing, cleaning, repackaging or even minor repairs. Failure to do so can be costly if a retailer misses the window to resell at full price.

Clipper Logistics chief executive Tony Mannix also highlighted the point that, whereas returns once happened in stores, where retailers are able to speak to consumers and find out what went wrong or sell them something else, now they predominantly happen online, so the process needs to be managed even more accurately.

“Returns are now anonymous and the interaction is digital. That is the last touch point.”

He concluded: “Getting it wrong means people will vote with their feet.”

Readers' comments (1)

  • The trade has created the problem as they're made it too easy for the customers. Free delivery and especially Free Returns, means the consumer isn't careful when their purchasing, with the inevitable consequences.

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