Smarter returns and how to deliver it with New Look

The Drapers Connects: Smarter Returns event, in partnership with ZigZag, addresses the growing complexity and cost of managing retail returns. Retailers are increasingly torn between offering free returns—a major customer expectation—and mitigating the high expenses associated with them. The discussion covers paid vs. free returns, strategies for reducing return rates, and how to manage frequent returners or "wardrobers" who return items excessively.

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Rachel Troke, Senior Product Manager at New Look, highlights the importance of offering flexible return options like in-store, home collection, and printerless returns to meet customer expectations. New Look’s decision to charge for postal returns, while keeping in-store returns free, reflects the balancing act many retailers face. Through extensive A/B testing, New Look found that customers accepted paid returns without significant changes to shopping habits, signalling that shoppers prioritise convenience and speed over cost when returning items.

Laura Davies, Director of Client Services at ZigZag, focuses on the technological aspect, offering digital returns solutions that streamline the return process for global retailers like Net-A-Porter, Selfridges, and Frasers Group. Digital solutions capture valuable data that can drive operational improvements, reduce return rates, and help inform buying decisions. For instance, retailers can analyse return reasons and adjust their inventory or marketing strategies accordingly.

According to the Drapers Connected Consumer Report, over 55% of UK shoppers expect free returns when purchasing fashion items online. However, the increasing costs associated with serial returners—who frequently purchase and return multiple items—are pushing retailers to rethink their returns policies. Charging for returns is becoming more common as businesses seek to manage operational costs and reduce environmental impacts. Companies like PrettyLittleThing and ASOS have introduced nominal charges to curb returns and promote more mindful shopping habits. For instance, ASOS charges for returns made after 14 days to incentivise quicker returns, while PrettyLittleThing has adopted a £1.99 fee for all returns.

The panel also discusses the environmental costs of frequent returns. For instance, repeat returners contribute to carbon emissions and waste, leading some retailers to see charging for returns as a way to educate consumers on the environmental impact of excessive shopping habits. New Look has embraced sustainability measures such as removing dispatch notes from parcels and trialling paperless returns to lessen their environmental footprint.

An important trend identified is segmentation. Retailers are encouraged to classify customers into different groups based on return behaviour and profitability. By offering personalised return options, such as incentivising in-store returns or faster refunds to e-gift cards, businesses can retain revenue and enhance customer loyalty. For instance, New Look is experimenting with faster refunds via gift cards, which 3% of customers have opted for, equating to millions of pounds saved annually.

Wardrobing—the practice of purchasing items, wearing them once, and then returning them—was highlighted as a challenge for retailers. Some brands respond by shutting down accounts of serial abusers, while others, like New Look, take a data-driven approach to identify and engage frequent returners, asking for insights to improve their internal processes. Rather than punishing these customers, the goal is to create smarter policies that improve the overall returns experience.

To enhance returns efficiency, both Rachel and Laura emphasised the role of technology. Implementing a returns portal helps capture detailed reasons for returns, providing invaluable data that can help retailers adjust their strategies. This data can inform product development, stock management, and future buying decisions, helping retailers manage inventory better and prevent frequent returns. For example, New Look uses data from its returns portal to rank products based on factors such as fabric, manufacturer, and style, which helps reduce returns by improving their product offering.

Moreover, returns kiosks in stores, such as those introduced by New Look in partnership with ZigZag, help reduce store queues while driving additional foot traffic and sales. Customers dropping off returns in-store are likely to shop again, benefiting both the retailer and the customer. Kiosks streamline the returns process by allowing customers to drop off items without waiting in line, while retailers can immediately update their back-end systems, leading to quicker restocking and minimising sales losses.

Another trend highlighted is the move toward sustainable and paperless returns. New Look, for example, is experimenting with package-less returns and encouraging customers to bring their own bags for click-and-collect orders. This reduces packaging waste, particularly for international returns, where oversized boxes can drive up costs unnecessarily. Centralised drop-off locations and locker systems, which reduce home collections, are also more sustainable, cutting down on delivery emissions and wasted resources.

The event concludes with a discussion on “save the sale” strategies, such as offering refunds via gift cards or store credit, which help businesses retain funds while offering customers immediate refunds. This approach, inspired by Amazon’s instant refunds, encourages customers to return and spend more, with studies showing that customers often spend 50% more than the value of the gift card on their next purchase. Retailers like New Look are in the final stages of testing this feature, finding it valuable for boosting customer loyalty and keeping funds within the business.

The session wraps up by underscoring the importance of data and technology in creating smarter, more efficient returns processes that are both customer-friendly and cost-effective. Retailers must find a balance between offering flexible return options and managing the financial and environmental costs associated with returns. As paid returns become more common, retailers will need to carefully consider customer behaviour, segmentation, and sustainability when shaping their returns strategies.

Ultimately, smarter returns are not just about reducing costs but also about improving the customer experience and promoting sustainable shopping habits. By leveraging data, technology, and customer feedback, retailers can transform returns from a costly challenge into an opportunity for innovation and growth.

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