Confessions of a serial refunder: Small businesses face £1,000 on average in refunds per month

UK shoppers are returning £7 billion worth of goods each year

Pre-pandemic, UK shoppers were reportedly returning £7 billion worth of purchases every year. However, the retail landscape has changed enormously in 2020, with coronavirus unquestionably impacting consumer habits.

One change has been the accelerated move from cash to contactless, leading to a 60% decline in the use of cash machines since March. More consumers are reluctant to use cash when most purchases can be made conveniently with the tap of a card, and most retailers now have card machines installed.

Another growing consumer trend which has seen a boom since the pandemic is the use of buy now pay later (BNPL) options.  Already growing at a rate of 39% a year since the beginning of 2020, the BNPL market share is set to double by 2023. 

We wanted to know if this behavioural change, along with the shift away from physical cash to plastic, has also had an impact on the UK’s refunding habits.

To find out, we’ve analysed the number of returns and found the average cost per month being refunded from our merchants.

So, are the UK public hoarding more of their impulse purchases, or are we seeing a rise in serial refunders? Here’s what we found…

Bolton has the most expensive refunds with £1.3k being refunded by businesses each month

At the top of the serial refunder leaderboard comes Bolton. Businesses in the northern city paid out £1.3k per month between May-October of this year. Almost twice as much as anywhere south of the border.

Southall was the highest placing southern English location to make the top twenty spots for serial refunders. The west London district handed out refunds worth a monthly average of £686.
Close to the capital, Reading placed third with £562 worth of refunds per month.

One self-confessed serial refunder in the UK’s hotspot, Bolton, admitted to breaking the policy:
“I always say my parcels haven’t been delivered. I look through the hole in my door and if the courier doesn’t take a picture of the item to prove it’s been delivered, I would just say I didn’t receive the item. I don’t make it obvious though, maybe 1 in every 4 parcels I get I will try and get a refund for. Works every time.” 

The UK’s serial refunding hotspots

Bradford tops the leaderboard for cities per capita indulging in serial refunding

Nestled in the eastern foothills of the Pennines, Bradford topped the list of major cities per capita for serial refunders, when compared to the other UK big cities. Bradford is followed by industrial hub Derby, which comes in second, while Nottingham and Glasgow are among cities with lowest return rates.

 The UK’s serial refunders per capita

The South West also sees its fair share of refunding, a current retail employee from the Top 10’s Bristol said:

“I work in a high-end fashion retailer and I see it all. One woman tried to return a pair of heels that had been battered. She tried to say that she had worn them once over a weekend for a party – the product code of the shoes flagged up that these were bought in 2015. 5 YEARS AGO! Her face was a picture. We haven’t seen her since.”

WFH contributing to expensive refunding habits

‘Work-from-homers’ topped our industry leaderboard for serial refunders with expensive taste. At just shy of £800 per month in returns, home & office furnishing businesses have taken the brunt of serial refunder habits. 

Surprisingly, the clothing sector narrowly missed out on being eliminated from our top 10. Perhaps due to lockdown, it is now less convenient for consumers to return clothing instore.

Automotive and personal services saw the least refunds, with businesses in these sectors averaging just one refund per month during the pandemic. 

So, what can small businesses do to help prevent the number of returns during the Christmas period?

• Make your refunds policy concise, understandable and visual, so all customers can access it before purchasing
• Ask cashiers to explain your refund policy at the till when serving customers
• If fitting rooms are closed due to the pandemic, make use of mirrors
• Make sure staff give first-class customer service, so buyers know what they can expect from their products

Methodology

Unique data was collated by analysing anonymised transactions from Paymentsense card machines across the UK to find:

• Regional refund figures using the number of refunds per business and total refunded per business
• Regional refund figures by industry – cross-referenced above data with industry categories from Paymentsense merchants
• The time frame for data is a specific 6-month period – May-October 2020