Why retailers should be prepared for a rise in returns 

The new age of eCommerce has arrived. Consumers, forced to shop online through necessity throughout much of 2020 and 2021, have permanently shifted their purchasing habits. The comfort of shopping from home, the ease and speed of deliveries and returns, and the choice and price of online catalogues have convinced even the most online-sceptic of consumers of the power of eCommerce. 

UK eCommerce is estimated to have grown by 46% in 2020 and now represents 23.3% of total UK retail (which is up from 15.8% in 2019). Naturally, a boost in eCommerce sales led to a rise in return volumes. As consumers tested the waters online, trying out new retailers with different sizing and material qualities, the number of return requests rose. Returns are an unavoidable part of doing business online. With no changing rooms to help guide decisions, deliveries perhaps not getting to the customer in time for the products intended use, or simply the product not living up to its online image, returns are inevitable.  

However, whilst return volumes were rising alongside eCommerce sales consistently for all retailers, return rates were falling for some brands. ZigZag explores why that might have been the case, but also highlights why this is likely to change soon. 

First off, what’s the different between return volumes and return rates? 

Simply put return volumes are the total amount of products returned by customers. Whereas the return rate is the average amount of returns received per 100 products sold. Return rates vary between product categories and can also be impacted by gender, age and even country of the consumer. You are far more like to return a jumper or dress than you are a likely to return a sofa, whereas Germany typically has higher return rates than the rest of Europe.  

Online vs offline return rates 

Returns rates are often far higher online than in brick-and-mortar stores. Omnichannel retailers such as TK Maxx and Next would most likely have felt their overall return rates rise during lockdown on like-for-like products. Return rates for in-store purchases are often around between 5-10%, whereas returns for the same products online are likely to be over 25%. So, when non-essential stores were shut for lockdown and customers were forced online, overall brand return rates across both channels would have risen. 

Who is likely to have experienced a drop in return rates? 

Brands that are likely to have seen a fall in their return rates are likely to have been pureplay online retailers. If we look at those that have experienced a drop in just their online return rates, department stores with wide product ranges including loungewear and garden and homeware. 

Online womenswear brand Sosandar are one of the few companies that are transparent with their return rates. They reported that in the summer following the March 2020 lockdown, their return rates dropped from 50% to 38%They believe this was “driven partly by product mix, but also by a shift in customer behaviour across all product categories”. Asos also saw a “significant and sustained reduction in return rates” also stating the reason was due to sales rising within categories with “more certain” purchasing behaviour. 

Traditionally rarely returned products thrived  

Many of the biggest winners of explosion in eCommerce during lockdown were goods that are typically returned less. Research by data insight company Kantar stated that loungewear grew by an astounding 146% year on year to £122m over the summer of 2020. John Lewis made an even larger claim that sales of loungewear and leggings rose astronomically by 1,303% over 2020. Loungewear is far easier to get right the first time of ordering online. A consumer is likely to only check if it is as comfortable as it looked online and the normal damage/condition inspection. Loungewear has more consistent sizing than most other clothing categories and most people buy loungewear baggy. There’s far less that can go wrong with an online loungewear order than a fast fashion dress.  

For retailers that sell across multiple apparel categories, including loungewear and more formal “going out” clothes, the increase in loungewear sales will mean it is responsible for a higher proportion of the retailer’s overall sales. This will result in an overall drop in the brand’s return rate. 

Similarly to loungewear, garden and homeware are lower-return product categories that enjoyed a boost during lockdown. With consumers across the world confined to work from home and forced to cancel all plans to have fun abroad, money was spent improving their homes. For department stores, such as Selfridges and John Lewis, rising sales in these categories would have resulted in a drop in their overall store return rate. 

Time to socialise  

On 21st June, the UK is set to return to pre-pandemic normality. Although who really knows with the UK government? Restrictions on meeting friends and family will be completely lifted, clubs and events will have the ability to max out capacities once again, and holidays might even be back on the menu for adventure-starved Brits. 

With all this excitement building, wardrobes for many will need updating. Sweatpants will be swapped for jeans. Leggings for summer dresses. Loungewear will once again watch as fast fashion dominates checkout baskets. As consumers make the switch back to more “public facing” apparel, return rates will begin to rise. Social clothing is held to higher scrutiny by shoppers. Sizing issues that may have been overlooked before with baggy loungewear will not be if you know you’re likely to be tagged on your friend’s Instagram.  

It’s not just clothes that come in different sizes 

For many of us, including this exercise-shy author, lockdown may have caused you to jump up a size (or two). With consumers less certain of their new size, fast fashion items in particular become more difficult to judge. This could lead to increased return rates as we disappointingly find out we cannot fit into the same shirt we did last year.  On the flipside, Gyms also opened for the first time in six months in April. So some dedicated individuals may have even got fitter in recently!

Additionally, as discovered in ZigZag Global’s recent Retail Returns Study, the process of bracketing will likely become even more popular. Bracketing is the term given when a consumer buys multiple sizes of the same product, with the intention of only keeping the product that fits perfectly, ultimately returning the others. 33% of consumers admitted to doing this in January 2021, rising to as high as 47% of consumers aged between 18-25-years-old, and this rate could rise with consumers rushing to get their wardrobes ready for summer. 

New online shoppers growing in confidence. 

As much as 9% of eCommerce users in the US were completely new to shopping online in 2020. The biggest jump of new users in recent years. Research from Retail Economics showed that “almost half (46%) of consumers completed a new online purchase that they previously only ever purchased in-store”.  

As consumers get more confident online, retailers should expect return rates to rise. Now online shoppers have seen the ease of eCommerce and the reliability of carrier services to get their orders to their front door, trust has been established. The next step from trusting retailers with their banking information is trusting carrier services to get their returns safely and for retailers to issue their refund. 

So, get ready for both return volumes and rates to rise this summer!