Retailers braced for unprecedented level of January returns

Analysts have warned that the increasing number of product returns in January from online orders in December could inflate festive trading figures.

New research from ecommerce consultant Javelin Group reveals up to 40% of fashion purchases and between 5% and 10% of electrical goods bought online are returned in January. Fashion retailers usually experience a 30% return rate throughout the year as shoppers struggle to check sizing online.  

Credit Suisse analyst Simon Irwin said: “Product returns no doubt have a small part to play in why December has been consistently stronger for retailers relative to the months after it.”

Next and John Lewis have reported strong Christmas performances spurred by the growth in online shopping in what has been dubbed a ‘multichannel Christmas’ by analysts. Next reports its online sales excluding the anticipated level of returns and makes a profit provision for the impact.

John Lewis also makes a profit provision but only removes the value of its returns after the product has been brought back, so its Christmas sales figures could yet marginally decrease. However, the majority of its returns are on technology products, which it sells more of online than fashion.

John Lewis’ rate of returns has risen from 10% to 12% over the past three years as online sales have grown to account for a quarter of its total business, The Guardian reported.

Retailers also often extend their returns period over Christmas to allow for unwanted gifts, leading to high return rates in January.