Small businesses in Bolton lost out on more than £3,000 last year due to customer refunds.

Following the pandemic and now during the cost of living crisis, small businesses are being hit hard and an impact on businesses that’s often overlooked is customer refunds.

Aside from profit loss, there is also the issue of reselling products.

With that in mind, card payment provider Paymentsense has looked at which regions in the UK are home to the biggest offenders when it comes to refunding, and the residents of Bolton are one of them. 

According to Paymentsense’s report, small firms in the town lost an estimated £254 a month due to customer refunds- just over £3,000 a year. 

However, it’s not all bad news for small businesses in the area, as this number has actually fallen by 62.3 per cent in the last year from £675.

Within the report, Paymentsense also looked into which industries were the most affected by refunds by region.

According to the data, retail was the heaviest-hit industry in Bolton in 2022 and this can include anything from sports goods to computer software shops. 

The data revealed that an estimated £543 was refunded per location per month for retail stores- totalling over £6,500 for the year - a huge hit for small businesses. 

The second most affected industry in Bolton by refunds was automotive and then apparel and clothing coming in third.

Robert Downes, Federation of Small Businesses development manager for Greater Manchester, said: “As the old adage goes, ‘don’t count your chickens until they’re hatched’.

“Retailers are well aware that a sale at the ‘till’ isn’t necessarily the end of the transaction, and customers often do make returns, and for a variety of reasons.

“Few people though are aware that actually in most cases high street retailers don’t legally have to refund goods just because the customer changes their mind, for example because it’s the wrong size if it’s an item of clothing.

“Refunds in these cases are done as a gesture of goodwill as shops want to keep customers’ happy.

“For online retailers involved in distance selling it’s totally different as they’re governed by much stricter refunding rules, and this has fuelled a new customer buying habits around ‘buy before you try’, which is why online shopping will have a significantly higher returns rate than traditional high street retail.

“There’s actually a significant cost to so many returns so it’s no surprise some online retailers are starting to punish shoppers who maybe perhaps buying three different sizes in the hope one will fit just right, and it could be why return rates are falling.   

“Me, well I’m old fashioned in that I like to see something before I buy it, be it TV, dishwasher, or an item of clothing for example, so prefer to visit my local high street where I can get hands on.

“For me there’s no substitute to try before you buy.”

An expert from Paymentsense has commented on the positive effects this has on SMEs in Bolton.

The expert said: “Customer refunds can prove very expensive for small businesses, so seeing a 62.3 per cent decline in refunds overall is a very positive thing for business owners.

“However, it’s likely that the reduction is a result of consumers spending less, thus needing to return less. 

“Despite this, we do know that retail sales volumes did grow by 0.5 per cent in January 2023, following a dip of 1.2 per cent in December 2022, according to data from the Office for National Statistics.

“As the economic state of the UK remains unsteady, this number is likely to fluctuate but seeing a year-on-year reduction in refunds and a month on month increase in retail sales, overall, is very positive for small businesses in Bolton.”