This is one of those situations where the following business model could be optimal:
1) Retailer decides the maximum of how many units it is willing to take into storage at a time, for a previously agreed upon time frame
2) Manufacturer ships for free the amount of merchandise it agrees to, to the retailer
3) Manufacturer dictates the minimum price at which the retailer can sell the units
4) Retailer sets the final price, and it will keep 50% of the difference
5) Customer has a 14/30 day grace period, in which time they can return/replace the unit, for whatever reason, with a ~10%/£20 max restocking fee
6) Manufacturer will handle the collection and potential replacement/refund of all the returned units at their own expense
7) Retailer will periodically transfer the sales revenue (minus the 50% profit margin) to the manufacturer
8) After the agreed upon time frame, the manufacturer will at its own expense take back all the units the retailer couldn't sell
With this sort of arrangement, the manufacturer can't be too greedy and dictate the minimum price too high, as the retailer will have to take its own margin in any case. Also, the retailer can't set the final price too high, as the merchandise won't move, and they'll lose in storage and marketing costs, etc.
I think I'll have to justify the 10%/£20 restocking fee:
There is a real issue with customers that purchase multiple products to simply "try out" them and choose the best one. Therefore, there needs to be some sort of discouragement for this type of behaviour, as this increases the costs for the manufacturer/retailer needlessly, which in turn increases the prices for everyone else. Therefore, a ~10%/£20 restocking fee is pretty much the only option. The return iterations will sting all parties involved, which will prevent the customer from going trigger happy, while at the same time encourages the manufacturer to maintain quality standards.
Also, if a manufacturer decides to simply ship the refurbished models as new, that's their choice, but the warranty and grace period is still full, and the (new) customers can still return the units, if the refurbishment was executed half-heartedly.
Win-win-win situation. (manufacturer-retailer-customer)