UK retailers warned over £1.05bn surge in gift returns

Manhattan Associates has flagged a surge in post-Christmas returns in the UK and warned retailers to expect similar pressure around upcoming gift-giving occasions. Clothing and footwear made up a large share of the items sent back.

In its January analysis, Manhattan Associates estimated that 52 million unwanted gifts were returned, worth a total of £1.05 billion. The findings highlight weaknesses in reverse logistics-the systems retailers use to move goods back from customers to stores, warehouses, refurbishment, resale, recycling, or disposal.

Returns have become a more visible operational challenge as retailers spread sales across stores, brand websites, marketplaces and social commerce channels. That mix adds complexity to stock management, processing times and customer service, especially during seasonal peaks.

Fashion pressure

Fashion was a focal point in the findings. Clothing accounted for 39% of returned gifts, while footwear made up 37%. Footwear also showed the sharpest year-on-year increase, rising to 37% from 21%.

The figures point to ongoing issues around fit and expectations, as well as buying decisions made under time pressure. Gift purchases add another variable, since recipients often have different sizing and style preferences from the buyer.

Footwear brands and retailers also face practical handling issues. Returned shoes can be harder to repackage in resale-ready condition than other apparel items, which can slow restocking and increase the likelihood of discounting.

Human contact

Manhattan Associates reported that 81% of UK shoppers prefer dealing with a real person for returns rather than a digital assistant. Of those consumers, 70% cited trust as the main reason for wanting human interaction.

Retailers have invested in automation across customer service and warehouse operations. But returns often involve disputes, disappointment, or confusion about policies and timing, raising the stakes for clear communication and easy escalation.

Martin Lockwood, senior director at Manhattan Associates, said retailers face competing demands from shoppers during these interactions.

"Retailers are facing a paradox where they understand customers want the speed and efficiency of automation, but they also crave the personalisation and trust of human interactions," said Martin Lockwood, senior director at Manhattan Associates.

He linked the issue to how businesses design and communicate returns processes across channels.

"The key is building AI confidence with customers through each communication and outcome-injecting personalisation into the returns process while combining technology with the empathy, flexibility, and problem-solving humans naturally bring," Lockwood said.

Age divide

The analysis also found a sharp generational split in return behaviour. Manhattan Associates said 53% of 18-24-year-olds returned at least one Christmas gift, while 87% of over-65s returned nothing.

The findings point to different expectations about shopping and service. Younger shoppers have grown up with online-first retail and low-friction returns, while older shoppers often retain habits shaped by in-store purchasing and traditional proof of purchase.

The dataset also suggested a divide in shopping plans. Manhattan Associates said over-65s were more than twice as likely to plan to do all their shopping in person at the end of last year (23%), compared with 18-24-year-olds (10%).

Social commerce

Lockwood highlighted social commerce as a factor that can amplify the impact of fulfilment and returns. He cited TikTok Shop as an example of how purchases and post-purchase experiences increasingly play out in public, including for brands that have traditionally relied on stores or their own websites.

"Social commerce turns every viral moment-and every return-into a test of supply chain performance. The generational divide between Gen Z and Boomers only amplifies this challenge. Retailers need to match the speed of digital engagement with the speed of physical delivery, while managing returns seamlessly across every channel. As social commerce rises, fulfilment failures will be marketing failures," Lockwood said.

That dynamic increases the need for consistency across channels, including how quickly refunds are processed, how simple drop-offs are, and whether customers can track return status without repeated contact.

Seasonal peaks

January is a traditional high point for returns, but retailers also face smaller spikes tied to specific events. Valentine's Day and Mother's Day typically lift demand for clothing, footwear and personal items, categories that also tend to have higher return rates.

The operational burden goes beyond transport and handling. Returns affect inventory accuracy and forecasting, as stock can sit in transit or in processing queues. They also pressure margins, particularly when items are resold at a discount or cannot be put back on sale quickly.

Lockwood said retailers need to be ready for returns pressure across all channels as shopping habits continue to change.