‘Returns season’ highlights need for new warehouses

The value of returned Christmas gifts in the UK could top £3.5 billion

The ‘Returns season’ is presently underway – with over £2.5billion worth of unwanted Christmas presents set to be returned to retailers.

Tim Davies, of global real estate advisors Colliers International, said the ‘Returns season’ puts significant pressures upon online retailers in terms of how they cope with such a large influx of goods.

He said: “The online retail revolution has resulted not just in the rise of internet shopping but also in the returns phenomenon that reaches a peak during the ‘Returns Season’ between mid-December and mid-January because of Black Friday, Christmas and New Year.

“Online retailers are responding to this by occupying stand-alone warehouses dedicated to dealing with returns. Not surprisingly this is leading to even more demand for warehouse units in a sector that is currently suffering from low supply levels.

“This will further strengthen the industrial market in the UK which can been seen in the increasing number of speculative developments – that is, schemes being built without identified end users – that are underway.

“In the South West alone these include 10 industrial units at the £150 million Bridgwater Gateway; a 217,000 sq ft logistics unit at Symmetry Park in Swindon; and 11 units at Vertex Park in Emersons Green.”

LCP Consulting, a BearingPoint company that works with many of the top 10 UK retailers, has estimated that Christmas 2017 present returns will range from £2.5 billion to £3.5 billion in order value.

This is based upon £17 billion of online orders being placed over the 2017 festive period with an average UK retail sector returns rate of 15-20%.

Return levels of goods ordered online in the UK are typically estimated at between 25% and 40%, and reach a peak during between mid-December and mid-January because of the combined effect of Black Friday, Christmas and New Year purchases being sent back.