Online returns: the unsustainable face of e-commerce
Last week’s annual Takeback Monday, the day when there is a surge in the amount of unwanted Christmas gifts and other goods being returned to retailers, was predicted by Royal Mail to be the highest ever, with the number of parcels processed per day in the UK up by nearly two-thirds compared with December ¹. And as many non-essential stores were closed both before and after Christmas due to Covid-19, we suggest the first month of 2021 may well turn out to be Takeback January.¹
These environmental costs have, until recently, been largely hidden from view, but with UK and European consumers increasingly switched on to the impact of their consumption, in part due to media exposure like David Attenborough’s Blue Planet, they are beginning to appreciate the wider issues associated with online retailing.
As shoppers become increasingly discerning about how and where the products they buy are made, we think it’s inevitable that they will look more closely at how their goods are transported. Last year nearly 3 billion parcels were shipped in the UK ², the cardboard requirement alone equating to around 17 million trees ³. Some degree of packaging will, of course, always be necessary, but the sheer volume of online returns in 2021 may make consumers question whether the current system is sustainable and encourage them to look more closely at the overall environmental cost of online retail. They are already increasingly aware of the tax disparity between online-only and traditional retailers and this, along with the introduction of measures such as a mooted tax on parcels, could lead to a shift in customer behaviour.
We believe that a shopper-driven change in how returns are handled will impact property in two ways.
Firstly, it’s likely to reaffirm the importance of bricks and mortar stores. For fashion (which accounts for by far the largest share of online returns) shoppers are likely to return to the previous practice of trying on items in-store and then buying only those they know fit/suit them. We think this could lead to interesting changes in store layouts as the cramped rabbit hutch changing rooms of yesteryear are replaced by capacious ‘smart’ changing rooms, which take on much greater prominence within store and thanks to technological wizardry become an integral part of the retail experience.
Greater shopper awareness of the total environmental impact of fashion garment production is likely to result in a significant uptick in fashion item reuse either through resale (we see significant potential for pre-owned merchandise retailing) or recycling. Both of these processes have potential implications for property and we’ll be exploring these in future Perspectives.
Secondly, a reduction in online returns could result in a decrease in online orders. While e-commerce was originally expected to grow steadily this decade (and is likely to do so in the short term, while non-essential stores remain shut), the longer-term effect of the pandemic may include a rethink of shopping habits, which in turn may relieve demand, especially in urban locations, for last mile delivery warehousing, and allow the space to be used for much-needed new housing.
While we certainly aren’t forecasting the demise of online retail, we think consumer reaction to the environmental issues associated initially with returns, and potentially with the whole e-shopping process, will keep it in check. That is a potential boon for bricks and mortar stores, and we are already encouraging retailers and developers to be ready to capitalise on it.
Article by Justin Taylor, Co-founder of P-THREE
¹ Source: Royal Mail Group
² Source: Statista
³ Source: Extrapolated from LimeLoop data
