Cost consideration

Zara’s online return fee may boost high street

Zara in Edinburgh’s St James Quarter (pic: Terry Murden)

Fashion retailer Zara has become the latest to stop offering customers free online returns in a move that may benefit the high street.

The chain’s online shoppers will now be charged a £1.95 fee at third party drop off points which will be deducted from the money refunded. Customers can still return or exchange items in store at no cost.

Zara is part of Intidex, which also owns chains Pull&Bear, Massimo Dutti and Bershka which have yet to say if they will follow suit.

Next already charges customers £2 as rising costs of handling returns, including higher transportation costs, is forcing a rethink that could see charging become established practice.

Asos, which has admitted to feeling the effects of “serial returners”, says it will stick to free returns. Marks & Spencer and John Lewis also have no plan to introduce fees.

Next is also charging for online returns (pic: Terry Murden)

But retail experts believe retailers cannot hold out against the impact of returns on their bottom line. Returns cost British retailers an estimated £7bn in 2019, according to research from KPMG – the last year before the pandemic when online sales rocketed.

“I think unfortunately a lot of retailers will be forced to do it because of rising costs. It could become quite widespread,” said Chloe Collins, head of apparel analysis at consulting firm GlobalData. “Other retailers will definitely be watching to see what the reaction is to what Zara does.”

Nick Carroll, Mintel’s associate director of retail research, said: “It’s a growing trend, it started pre-pandemic and it will continue, as online shopping continues to grow. Allowing free in-store returns may help drive people back into shops.”

One in three items bought online are returned, with many consumers deliberately ordering a range of sies and styles and sending back the ones they do not want. Some are ‘wardrobing’ – wearing a product for an event and then returning it.

While Asos said it has no plans to charge, it did introduce a policy in 2019 whereby it reserved the right to deactivate the accounts of shoppers suspected of buying and wearing items before returning them for a refund.

Boohoo partly attributed a 94% slump in before-tax profits to the end of February to the number of returns being made post-lockdown as well as increased freight and logistics costs.

Each return costs businesses £20 to process when factors such as shipping, tracking and repackaging are accounted for, according to returns management software company NShift.

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