UK retailers risk losing £34.1 billion in annual sales by implementing stricter returns policies, according to new research. The figure represents a significant portion of the total UK retail spending on textiles, clothing, and footwear, which reached £57.8 billion over the past 12 months.
The warning comes at a challenging time for the sector, which is already grappling with thin margins and cautious households. The research suggests that shoppers may cut back on purchases if returns policies become more restrictive, with 59% of consumers saying they would be less likely to make a purchase if a retailer introduced return fees or stricter returns policies.
A survey of 2,000 UK shoppers found that 56% would switch to a different retailer altogether if faced with stricter returns policies. Only 38% said they would hold on to items rather than return them in response to a fee, while one in five shoppers expect or plan to return goods from the majority of orders they place.
The findings contradict the growing trend of retailers introducing return fees, shorter return windows, and tighter eligibility rules to combat rising returns costs. This strategy may ultimately dent spending and loyalty, particularly at a time when shoppers are easily lost.
Experts argue that retailers need to balance operational efficiency with customer expectations to avoid driving shoppers away. Rather than relying solely on stricter returns policies, retailers may find greater success through investments in technologies and operational improvements that reduce unnecessary returns before they occur.
This approach includes better product information, enhanced sizing guidance, sharper inventory visibility, and more efficient fulfilment. By improving operational efficiency across the supply chain, retailers can lower return-related costs while maintaining the flexible shopping experience consumers expect.
The goal for retailers is to improve purchase confidence, not undermine it. As the sector continues to evolve, the question for boardrooms is whether the cheapest way to cut returns is to charge for them or to design them out altogether. For an industry focused on every basket, £34.1 billion is a sobering reminder that the route to healthier returns may run through the warehouse and the product page, not the refund policy.
