Fashion Industry Faces Challenges with Growing Return Rates

For a long time, the fashion industry has viewed returns as an unavoidable part of business. Many consumers order multiple sizes, leading retailers to manage logistics costs associated with sending garments back and forth. This has become routine, especially for fast-fashion brands, resulting in online return rates averaging 40%.

The financial and environmental impact is significant. High return rates reduce profit margins and contribute to excess packaging, emissions, and waste. As expectations for profitability and sustainability grow, brands are shifting their focus from managing returns to preventing them.

One of Britain’s prominent entrepreneurs, James Caan CBE, has shown interest in this challenge. Known for his role on Dragons’ Den and founding the private equity firm Hamilton Bradshaw, Caan has invested seven figures in SNAG, a size-inclusive hosiery and apparel firm led by entrepreneur Brie Read. This marks his first consumer-facing investment in two decades, highlighting a trend toward addressing structural inefficiencies rather than competing solely on price or marketing.

SNAG’s strategy is centered on fitting clothing to more body types to reduce returns. They design garments in U.K. sizes 4 to 38 (equivalent to U.S. sizes 0 to 34) instead of using a conventional sample size. This approach targets a customer base often neglected by mainstream fashion, while also cutting down on one of retail’s major costs.

Since its launch in 2018, SNAG has sold over three million products and generated more than £250 million ($335 million) in revenue, proving the commercial viability of inclusivity. The company’s efforts have reduced their return rate to about 2%, a stark contrast to the industry’s average of 40%.

“The way fashion operates today is under increasing pressure. High return rates erode profitability and create unnecessary waste at scale,” Caan stated. “SNAG’s model shows that a different approach is viable and commercially attractive. They expand to a larger market by designing for a wider customer base. I back founders with conviction, and Brie has created something transformative.”

As retailers face rising logistics costs, narrower margins, and increased environmental scrutiny, the high cost of returns is becoming more evident, especially with the growth of online shopping. Instead of viewing returns as an inevitable part of e-commerce, SNAG aims to eliminate the reasons for returns.

Read believes traditional sizing often caters to manufacturing convenience over consumer needs: Sizing has always been built around a narrow idea of who clothing is for, and everyone outside of that was expected to adapt,” she said.” Our model proves that designing for real bodies is better for customers and better for business. Having James on board gives us the platform to expand further, faster.

Beyond financial backing, Caan will assist SNAG’s leadership with international expansion and scaling operations. His investment reflects a broader investor trend toward funding businesses that address substantial operational problems while aligning with consumer demands for sustainability and inclusion.

If these trends persist, the fashion industry may see a shift from fast-fashion to clothing that truly fits.