For retailers and environmentalists alike, the crux of fashion e-commerce is the high volume of returns. At best, returns should be mitigated at point of sale, reducing a potential for return shipments, and to be handled more efficiently if they do get sent back. This requires optimisation of logistics and operations processes for efficiency and sustainability, according to a new report by the Institute of Positive Fashion (IPF) called Solving Fashion’s Product Returns: How to Keep Value in a Closed-Loop System.
The report, created in association with the British Fashion Council (BFC) and Roland Berger, alarmingly confirms the returns process in the UK generated 750,000 tonnes of CO₂ emissions in 2022 and saw some 23 million garments sent to landfill or incinerated. The figure represents 75 percent of the approx 3 percent of all returns that can not be resold.
Further data comes from a consumer survey conducted by the IPF, Roland Berger, and Dynata to better understand UK consumers’ online fashion purchasing and returns behaviour. The top reasons for returns include incorrect sizing or fit (93 percent) and product quality not meeting expectations (81 percent).
Across age demographics, Generation Z (born in 1997-2012, aged 10-25 years old) were classified as high intensity online shoppers. The same distribution proportion is seen for returns, with 32 percent being high intensity returners. Womenswear is the most returned product category.
56 percent of shoppers surveyed said a returns charge is the measure most likely to prevent returns.
The environmental cost of fashion returns and generated waste
20 percent of returns need to be ironed or washed before resale, incurring water use and emissions, while around 2-3 percent of all returns go to landfill or are incinerated. For retailers, returns are associated with high costs and are detrimental to margins.
With innovation in AI and sizing metrics, the onus is on retailers to help consumers make the right choice by leveraging data and digital solutions. Investment in sizing calculators will become an industry norm and digital avatars an integral part of the future for fashion retailers, says the report.
Furthermore, retailers need to look closely at reverse logistics to reduce costs and meet CO₂ emission targets. This involves investing into technologies and processes such as digital product passports and automated warehousing, so that businesses can make returns operations more efficient, cost-effective, and less carbon intensive.
Caroline Rush, BFC Chief Executive, said: “This project recognises the importance of investing in innovation to secure robust and profitable businesses, while safeguarding the planet and society. The responsibility now lies with retailers and fashion businesses to reach the target state by implementing the necessary change across their entire businesses from production to reverse logistics.”
Siobhan Gehin, Roland Berger Senior Partner, said: “Tackling the returns issue is being prompted by lower consumption, impending legislation and higher operating costs – the latter probably being the strongest motivator for companies to move from a linear to a circular business model. While the future for fashion is circular, achieving it is not an easy task. The prize, though, is that circular fashion businesses are estimated to grow 18 percent per annum from where they were at the beginning of this decade to 2030, whereas the rest of the market is looking at just 3% annual growth.”
After sale customer engagement
Brands and retailers noted in the report that one significant way the fashion industry can reduce the environmental impacts of returns is to find ways to extend the product lifecycle, such as repair and rental. This not only has environmental benefits, but also gave retailers a way to engage with customers even post-sale.