The real environmental issue with returns

The longer time goes on, and the more serious the environmental issues become, the more this pressure is building, and the graver the consequences of inaction or taking the wrong kind of action.

One area that is widely acknowledged as being undesirable environmentally but hasn’t yet had its moment in the regulatory or PR spotlight, but will eventually find its way there, is returns. But what are the real environmental issues with returns, and what should retailers be doing differently?  

Transport: a case of smoke and mirrors? 

To date, the narrative around the environmental impact of returns has focused on carbon emissions from transport – to the extent that many retailers see this as the biggest part of the problem.  

But while transport is an issue, and prevention is always better than cure, some returns are inevitable or even to be encouraged, meaning retailers can only reduce their road mileage so far. We also expect to see more retailers invest in electric fleets and perhaps take a leaf out of Skyscanner’s book by allowing customers to choose returns options based on their relative environmental impact. 

The real issue: a lack of efficiency in the returns process 

Our end-to-end analysis of returns in major retailers reveals that the real culprit is the way that returns are processed, including a lack of speed, efficiency and policy enforcement. 

According to the British Fashion Council, 23 million returned garments were sent to landfill or incinerated last year. Our insights reveal that excessive volumes of returns are written off for three main reasons: 

1. A lack of stringent policy enforcement e.g. accepting returns where the customer has used the item or after the deadline has passed, especially seasonal items that can’t be resold.
2. An unnecessarily long and convoluted returns process  makes it less likely that stock can be resold e.g. due to obsolescence, end of season or damage (we’ve seen instances of returns taking longer than two months to go back on sale).
3. Alternatives, such as refurbishing items or sending unsaleable stock to charity shops or recycling centres (which involve expensive debranding and require the right infrastructure and relationships) are often considered poor return on investment or difficult to set up.  

With better ownership of returns in the business and a more joined up approach, data-driven decision-making can be used to ensure that returns are processed quickly and sent to the location where they have the highest chance of being resold, ideally at full price. 

This should be coupled with clear KPIs, monitoring and improvement around return volumes, stock preservation, environmental impact and full-price resales. 

Not only is a transformation of the returns process beneficial to the environment, but greater efficiency can also unlock £millions by reducing costs and maximising revenue. 

Another contributor to waste and obsolete stock is of course retailers buying too-high volumes in the first instance, so improving the accuracy of this should also feature heavily in their sustainability plans. Managing returns properly plays a key role once these upstream decisions have been locked in. 

Getting ahead vs. getting caught out 

The challenge is that these operational issues are less visible than the lorries on our roads for example, making it harder for retailers to make it a priority. 

If retail executives are serious about sustainability, they need to get better end-to-end visibility of returns and use this to measure and manage critical KPIs, including environmental KPIs such as greenhouse gas emissions and waste. Otherwise, returns will become an even bigger issue and the media, pressure groups and consumers will start asking more questions.  

As the environmental discourse grows, and retailers focus more heavily on ideas like circularity – which can never be achieved while so many returns are being written off – it will be interesting to see which retailers take a more holistic approach to solving the returns issue and leverage the data within their business to ensure they’re focusing their efforts on the right interventions.