For more information see Mintel’s Fashion Online – UK, June 2017, Menswear – UK, March 2019, Womenswear – UK, May 2019 and Purchasing Journey for Fashion – UK, June 2019.

• A growing number of fashion retailers have reported that they are struggling with excessive rates of product returns. 

• In a recent trading statement, Zalando has announced better-than-anticipated profits during Q1, with analysts suggesting that the improvement was driven by changes to the retailer’s returns policy.

• Late in March 2019, ASOS also announced that it was changing its returns policy, with the retailer threatening to deactivate customer accounts if they notice an unusual pattern of returns activity.

• Mintel’s research helps to put the returns challenge into context as almost a third (29%) of UK clothing consumers have bought multiple items of clothing with the intention of returning at least some of them.

In November 2018, it was revealed that online-only retailer Zalando was trialling a number of initiatives designed to reduce return rates and stop its customers from abusing its returns policy. The retailer is testing delivery changes for smaller orders in select countries (including Italy, Spain and the UK), and it has introduced oversized tags to prevent people from wearing clothes and then sending them back. Returns will only be accepted if the tag is still attached.

In parallel, ASOS also revealed stricter returns rules in early March 2019. As well as an email informing customers of the changes being sent, ASOS now states the following in its terms and conditions: "If we notice an unusual pattern of returns activity that doesn't sit right: eg we suspect someone is actually wearing their purchases and then returning them or ordering and returning loads - way, way more than even the most loyal ASOS customer would order - then we might have to deactivate the account and any associated accounts."

Figure 1: ASOS Customer Email, 30th March 2019

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Source: ASOS/Mintel

The returns issue is something we explore in Mintel’s Menswear – UK, March 2019 and Womenswear – UK, May 2019 Reports, with consumer research revealing the prolific extent that consumers are returning goods, as well as how normalised returning goods now is to young people.

The percentage of clothing consumers that have bought multiple items of clothing with the intention of returning at least some of them rises to as many as 42% of 16-24s and 47% of 25-34s.

However, in addition, the research also found that around one in five clothing consumers (21%) in the UK have worn an item of clothing and then returned it afterwards, with this figure peaking at 42% of 16-24s and gradually declining thereafter in direct correlation with age. This highlights that a significant number of consumers are now abusing the ability to return goods.

The problem has also been fuelled by the rise in online shopping, and research for Mintel’s Fashion Online – UK, June 2017 found that half (50%) of online fashion shoppers in the UK have returned items that they bought online. Again this figure rises amongst young people to 53% of 16-24s and 57% of 25-34s. This mirrors Zalando’s previous reports that as much as 50% of the products that it sells online are returned.

This is particularly problematic given that the latest research for Mintel’s Purchasing Journey for Fashion – UK, June 2019 shows that consumers are now as likely to shop online for fashion as they are in-store. This means that the share of consumer spending on fashion that the online channel captures is likely going to continue to grow, and as a result, returns will continue to be problematic for many retailers. 

There is, of course, the argument that a significant proportion of returns are necessary and inevitable, particularly for those shopping online, and that consumers are not purposefully abusing returns policies. Sizing and fit issues are notable, alongside the inability to see garments ahead of purchase for those shopping online.

Research for Mintel’s Menswear – UK, March 2019 and Womenswear – UK, May 2019 found that three out of four clothing consumers in the UK (75%) agree that the variation in sizes across different brands and retailers is frustrating. Meanwhile, 60% think it can be difficult to find clothing that fits well, further illustrating how difficult it can be for consumers to find clothes that are right for them.

In response, a number of retailers are now innovating to find ways to offset these challenges and make it easier for consumers to know which products are most suited to them. Amongst these is ASOS, which is investing in an AI-powered sizing tool in a bid to reduce return rates, as we discuss in our Analyst Insight ASOS rolls out Fit Assistant feature. Such efforts are likely to resonate given that 50% of UK clothing consumers think online size guides are often too complicated.

This means that, alongside more stringent returns policies, retailers are also likely to look for ways to minimize the need for customers to return goods, and these are less likely to have a negative impact on perceptions of the retailer.

• This issue is widespread and ASOS and Zalando are not alone in this challenge, and as a result, we expect more retailers to take action going forward.

• Returns are paramount in where people shop, as 44% of fashion consumers say that an easy returns process is one of the factors that would make them choose one retailer over another when shopping for fashion items.

• As a result, imposing stricter returns could erode perceptions of a retailer and could have a negative impact on customer numbers (and conversely sales) as serial returners may choose to shop elsewhere.

• However, as profitability is one of the biggest challenges facing the fashion industry at present, retailers undoubtedly need to do anything they can to reduce returns (and thus costs).