Fashion Retailers Slash Returns Costs with Smarter Policies

Fashion retailers are experiencing a significant positive shift in their returns landscape, with a reported one-third reduction in returns-related traffic. This welcome development, highlighted by delivery specialist ZigZag and Retail Economics, addresses a substantial financial burden previously estimated at £6.6 billion. The data indicates that the number of serial returners has decreased from 12% to 8%, projecting a substantial saving of £1.7 billion for retailers in 2025 compared to the previous year.

This improvement directly correlates with the widespread adoption of 'smarter returns policies designed to reduce abuse,' implemented by 76% of the UK's top 100 clothing and footwear retailers. The report notes that the introduction of modest returns fees, typically ranging from £2.50 to £2.95, is effectively "changing behaviour and resetting expectations." This suggests that retailers are successfully "gaining control over the most opportunistic returners" who previously exploited lenient policies.

However, the shift in consumer behaviour is not without its nuances. While serial returners are undoubtedly sending back fewer items, this decline has been partially offset by an increase in both occasional and slow returners. ZigZag describes this as a "displacement between groups," where problematic behaviours are curbed but not entirely eradicated. The analysis suggests that with limited incentives to return goods promptly, some shoppers are now either keeping unwanted items or delaying their return, indicating a new set of challenges for retailers.

ZigZag further elaborated that "returns fees and added friction have curbed the most problematic behaviours, but not all serial returners have become efficient ones." This points to a rebalancing of the "returns culture," where retailers are now strategically focused on finding a balance between protecting their profit margins and preserving customer satisfaction. Understanding consumer tolerance for these changes is key; the report found that Gen Z and Millennial shoppers are willing to pay up to £2.10 in returns fees before reconsidering a purchase, a higher threshold than the £1.50 for older shoppers, offering brands some flexibility in refining their models.

Al Gerrie, CEO of ZigZag, underscored the strategic importance of returns policies, stating, "Returns policies define customer behaviour at the checkout. Curbing serial returners was an absolute priority after a disproportionate £6.6bn hit last year." He emphasized the industry's move to differentiate between loyal customers and those "gaming the system." Gerrie believes that when executed effectively, returns policies can be a clear competitive advantage, requiring a delicate "balancing act between cost control and customer satisfaction." He cautioned against a "one size fits all approach," urging retailers to continuously refine their returns models due to the prevalence of basket abandonment and constantly shifting consumer expectations.

Richard Lim, CEO at Retail Economics, acknowledged the significant progress retailers have made in mitigating the most costly returns behaviours. Looking ahead, he suggested that "the next step is about encouragement as much as deterrence." Lim advocates for clearer communication, faster refunds, and loyalty-linked incentives as effective tools to "nudge shoppers towards returning items quickly and responsibly." He concluded that as returns policies mature, the industry's focus will evolve from merely reducing costs to proactively "shaping positive, efficient post-purchase behaviour."