San Diego Union-Tribune

WAVE OF RETURNS GIVES ONLINE RETAILERS A NEW YEAR HEADACHE

In the U.K., returns between Christmas and New Year rose by 26%

- BY KATIE LINSELL Linsell writes for Bloomberg News.

Cautious shoppers have kicked off the year with a flurry of returned goods, spelling a headache for retailers and highlighti­ng how squeezed consumers have become by the higher cost of living.

Returns rose 20 percent in January at ReBound, a firm that handles returns for retailers, as shoppers worldwide become more selective due to tighter budgets. The company’s clients include footwear brand Crocs and outerwear label Helly Hansen.

More retailers are starting to charge shoppers for sending back online purchases, with U.K. fashion chain New Look introducin­g a fee following similar moves by Zara and Boohoo last year.

The highest inflation in around four decades is weighing on consumers and driving them to prioritize essentials like food and heating. With more shoppers buying on credit and returning goods to stores, the better-thanexpect­ed sales at Christmas may not have been as meaningful as some observers hoped.

“People are being a lot more picky about what they want to keep,” said Pippa Stephens, an analyst at research and consulting firm GlobalData in London. “A lot of retailers are struggling with it.”

Returns are costly for retailers both in lost revenue and in the cost of trying to turn around an item to be sold again. In the U.K. alone, about £6 billion ($7.2 billion) worth of goods were returned last year and that’s expected to increase to more than £7 billion by 2027, according to GlobalData. The biggest driver is ill-fitting clothing and footwear.

Boohoo warned of significan­tly higher return rates when the company slashed its profit guidance in September and since then the fast fashion retailer has said sales will drop about 12 percent in its financial year, which ends this month.

Rival Asos also partly blamed returns for lowering guidance and last month the retailer said the trend isn’t winding down.

Unlike Boohoo, which charges £1.99 per package, Asos has kept free returns partly because it stocks more than 850 brands, so sizing is often unpredicta­ble for consumers. Chief Executive Officer Jose Antonio Ramos Calamonte has called free returns a key part of the company’s strategy.

Returns have ramped up since the pandemic when lockdowns meant that most clothing purchases were for loungewear, which doesn’t need such an accurate fit. The return to work and events, coupled with the higher cost of living, has made consumers demand more from new outfits.

“At the moment consumers are only keeping what they really love,” said Jelle Schoenmake­r, managing director at ReBound. “Skyrocketi­ng household bills have turbocharg­ed this trend.”

In the U.K. alone, returns between Christmas and New Year rose by 26 percent to more than 50,000 parcels, according to ParcelLab, which works with brands such as H&M and Bose.

 ?? CHRIS RATCLIFFE BLOOMBERG ?? Unlike some U.K. retailers, Asos has kept online returns free. The biggest driver of returns is ill-fitting clothing.
CHRIS RATCLIFFE BLOOMBERG Unlike some U.K. retailers, Asos has kept online returns free. The biggest driver of returns is ill-fitting clothing.

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