Nearly half (40 per cent) of all clothing bought online is returned in January, along with between five and 10 per cent of electrical goods purchased via the internet.
According to analysts at Credit Suisse the “boomerang effect” sees retailers Christmas trading figures artificially inflate only for New Year sales figures to be depressed once the goods are returned, leading one fashion retailer to claim that unless retailers clarify how they are accounting for returns it can be difficult to judge their true performance.
Peel Hunt retail analyst John Stevenson commented: “I would be amazed if we get to the year end and find out there has been an issue with returns.”
Over the last three years John Lewis in particular has seen a two per cent increase in its online returns as its e-commerce option has grown in popularity.
Clothing has the highest return rate of all items purchased online as size and fit can be difficult for consumers to judge online leading shoppers to purchase multiple sizes and colours to try on before returning those which do not suit. E-retail consultancy Javelin Group suggests these types of purchases account for around 30 per cent of all clothing returns.
Founder and chief executive of virtual fitting room provider Fits.me, Heikki Haldre, said of the issue: “If the returns rate for clothing in January is really only 40 per cent then I think most retailers would breathe a sigh of relief – anecdotally I have heard of rates approaching 70 per cent in January as unwanted or incorrect Christmas gifts and spontaneous purchases made during post-Christmas Sales are returned.
“Irrespective of how return rates are reported or accounted for, or whether they are 40 per cent or 70 per cent, such levels must be crippling for retailers – just the impact on cash flow must be painful.
“Since return rates for clothing sold online is predictably higher than for items sold in-store, it’s inevitable that returns as a proportion of overall sales will increase, and – if it’s not already – it will quickly become a problem for those retailers that find themselves doing more and more of their business online.”