UK retailers are facing significant challenges in 2024, with the cost-of-living crisis and other economic challenges impacting consumers and businesses alike. To address this, many clothing retailers have run extended sales and promotions at the start of this year. This has been successful in raising sales, but it also inevitably means that companies have to deal with a higher volume of returns.
According to Statista, the most returned item in 2023 was clothing, making up 30% of returns, with shoes accounting for 15%.. In IMRG’s ‘Navigating the returns challenge’ report, fashion retailers reported that up to 45% of the items they sold are returned, with the average return rate of 25% in 2022. Boohoo is one retailer in particular that has shared worrying figures, indicating that returns have played a part in its 92% reduction in profits, while wider industry analysis shows that UK shoppers sent back over £4.1bn of online clothing purchases in 2022, with this figure predicted to rise by 16.7% before 2027.
For retailers, the issue of reverse logistics can be a perplexing one: companies need a rapid means of processing millions of returns and getting items back into stock – both online and in-store – to prevent losses. However, according to Exotec, this headache can be reduced by embracing modern warehouse automation that is best equipped to deal with returns.
Simon Jones, sales executive at Exotec, said: “As return rates continue to rise, retailers must process returned items and get them back into their sellable stock as quickly as possible. This is even more critical for the fashion industry as seasons are very short. Fashion goes out of fashion quicker than any other product type and lines are moved quickly to “sale” status and discounted, destroying margins and revenues. Many omnichannel brands can offer free returns in store even for online purchases, which gives customers the chance to browse and potentially buy other products, while enabling in-store employees to place goods back on the shelf as soon as they’ve been checked.
“However, this is not the case for pure-play online fashion retailers, many of which sell hundreds of thousands of items between £10 and £25 at low margins. With such high return rates in fast fashion, returns are costing retailers a great deal of money if they’re unable to get returned items checked, cleaned, and repacked rapidly before returning them to circulation for resale. It is no surprise that many are deciding to introduce fees for returns: in 2022, free retail returns cost the UK fashion industry £7 billion pounds. Even with return fees, it is a costly process and one that must be managed efficiently.”
Jones continued: “Online retailers must ensure their fulfillment operation is as productive as possible to improve profitability, and crucially, that reverse logistics is given just as much attention as the rest of the operation.
“Many retail warehouses are using manual picking for their ecommerce fulfilment, requiring three to five times the labour to fulfil orders compared to high performance automated robotic systems. Productivity takes a further hit when putting away and re-picking returned items in a manual warehouse.
Automated systems like Exotec’s, in contrast, can speed up the process by quickly scanning returned items into a mixed SKU bin. This eliminates walking time to each stock location for each SKU or putting them in a pick-first returns area, making the process much faster and less labour-intensive. Also, when a customer next orders a specific SKU a returned unit is always presented at the pick station first.”
Jones concluded: “To improve returns processes and protect profits, online fashion retailers must give serious consideration to overhauling older, manual picking processes and automate as much as they can. This can be the difference between having to discard a returned item and being able to resell it in-store or online for full price. At a time when profit margins are being squeezed and consumers have become accustomed to returning purchases at will, the importance of slick, efficient reverse logistics cannot be overstated.”
