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Fashion hit by £1.6bn peak returns impact

Fashion retailers in the UK are set to be hit by a £1.6bn impact on margins over the peak trading period, as customer returns spike in the wake of Black Friday.

Overall retail will see a £2.4bn impact on margins as a result of returns between Black Friday and Christmas Eve, up from a £2bn impact in 2017.

The research, from returns platform ReBound Returns, which analysed data from 40 UK retail companies, indicates that 3 December was the date with the highest number of returns – with 143% more products returned on that day compared to a typical Monday.

Overall, fashion retailers in the UK face a £6.6bn impact for 2018, up from £5.7bn in 2017. Returns over the peak trading period hit retailers particularly hard, as it is more difficult to recover returns costs when items are resold. Due to busy trading, many returned items are not processed fully until January, so are resold at a discounted price in end of season Sales.

This decreasing resale value, as well as the high cost of processing returns – including cleaning, tagging and reselling – is the reason for the negative impact on margins. Graham Best, CEO of ReBound Returns, noted that retailers sometimes neglect returns during the busy season.

“At such a busy time, many retailers only turn their attention to processing returns in January, and this has severe consequences for their margins. Ultimately this problem comes down to tracking, as retailers often aren’t aware of the value of stock being returned to them until they begin opening packages in a warehouse.”

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