Fashion brands’ profits hit as customers return worn clothing

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Asos is blaming a “significant increase” in returns from shoppers as the big reason for its latest profit warning – the third in less than a year.

It is not alone. Retailers across the fitting-room-free world of fast fashion, where ordering online means buying before trying, are processing a deluge of unwanted items. “Everyone is experiencing a swamping of returns,” said Kayla Marci of Edited, a retail technology company. “It spiked after Christmas, and is now higher than it was this time last year.”

This isn’t the first time fashion profits have been dented by buyer’s remorse. In 2019, Asos and Harrods blocked shoppers whom they believed were “wardrobing”, ie returning worn purchases.

Certainly, wardrobing is a lot easier to do in a post-pandemic world, said the retail analyst Clare Bailey. “You could order a lovely jacket and pop it on for a Zoom call, then it can go straight back, with the retailer bearing the cost.”

“Wardrobing or not, what shoppers are doing is being more critical of what they keep,” Bailey said. “They’re still ordering a large amount of clothes but then they think: ‘I cannot justify this. My budget is squeezed.’ They’re more focused in what they keep.”

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The coronavirus pandemic enabled consumers to be “very comfortable ordering a £1,000’s worth of clothing and only keeping £200”, Bailey said.

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The online boom also prompted a rise in “bracketing”, Marci said (when a consumer buys different sizes and returns all but the one that fits). Levi’s has attributed 40% of its returns to sizing issues.

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Bailey estimated that the cost of delivery to brands had doubled during the cost of living crisis, with “transport, labour and processing all going up – the delivery charge doesn’t cover that”.

Last month, Zara said it was introducing a £1.95 charge for online returns; Uniqlo and Sports Direct already do, while Urban Outfitters says it is testing charges in the EU.

In normal times, there is a business case for free returns, said retail analyst Natalie Berg said: “The most valuable customers tend to be the ones that return the most. The challenge is that with everyone cutting back on their spending, the whole business model becomes more vulnerable.”

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