Roundtable: Retailers learning to love returns – if the process is right

The tide might just be turning, you know. Many retailers are seeing customer returns less as a problem and more as an opportunity.

 

Some are considering a realignment of their organisations to reduce the financial impact that comes with returns and, importantly, making the process easier to understand for consumers. Others are turning returns management into a key part of new reverse logistics revenue streams.

 

These were some of the standout findings to emerge as I co-hosted another breakfast roundtable for retailers alongside Manhattan Associates at Soho Hotel, London on 6 November.

 

Guests at the roundtable included operations, tech and ecommerce leaders and returns specialists from Argos, Currys, Decathlon, JD Sports Fashion, John Lewis, Moss, Specsavers, and URBN.

The roundtable was held under the Chatham House Rule, meaning the anonymity of those involved is secured. But I’ve picked out some key quotes, below, and provided a few thoughts to accompany them.

 

1. “We love returns, although we don’t like the cost of returns. But how we deal with them is a key customer service aptitude profile driver and returns can fundamentally make or break the experience a customer has with our business.”

 

This was interesting to hear. Despite recent research from Retail Economics and ZigZag showing retailers are clamping down on serial returners and reducing the overall cost of system abusers, retailers know returns are simply part of doing business and are set upon improving management of them for the consumer and the retailer alike.

 

Retail Economics forecasts the value of returns across all non-food categories in the UK will fall to £25.1bn in 2025, which is a significant £1.6bn drop on the previous year. Although several retailers – particularly those in the fashion space – talk of 40%-plus returns rate the industry average is expected to ease from 21% to 19.5% as fees and tighter policies influence behaviour, the Retail Economics study noted.

 

2. “The first focus should always be on ‘how can we deliver right first time?’, but also of importance is establishing a formal and clear returns policy that is communicated clearly with customers and staff alike.”

 

Retailers discussed how previously confusing policies on returns correlated with increased unrest among customers during the in-store returns process. Simplification, particularly through multichannel retailers allowing stores to manage returns no matter where the item was purchased and empowering staff with tools to quickly make decisions, is key for keeping consumers happy and loyal.

 

This is crucial, too, in a challenging economic environment because staff on the frontline need to focus on selling rather than getting embroiled in lengthy exchanges with customers on that have the ripple effect of causing queues and negative shopfloor vibes.

 

One retailer at the roundtable said setting a clear policy and then winning hearts and minds of staff through relevant training is the place to start for a retailer looking to turn returns from problem to commercial opportunity.

 

3. “Returns are a rich data point.”

 

One of the benefits of returns is it allows for retailers to find out information from their customer – it is an ideal juncture at which to engage with consumers.

 

It might be to learn about general sentiment or an opinion or report related to a specific product or range which can then be fed back to development teams. As one retailer put it, “people are very quick to offer their views when it comes to why they don’t like a product” – and that is the sort of information that can help shape future business plans.

 

4. “The average exchange in a store is £9 more than the original”

 

By not having a smooth, cross-channel returns experience in place, retailers could be missing out on higher revenues. One retailer said 80% of its web returns come back to stores, and when exchanges took place they tended to result in those customers buying other goods and growing their original basket size.

 

This is another example of returns as an opportunity.

 

If retailers can find a way to quickly get returned stock back into circulation or find value in disposing of damaged stock or exploring spare part recovery, then facilitating returns becomes the opposite of a weight on the bottom line.

 

5. “You always have to cater for the poorest behaviour, and this drives the system you put in place and limits the potential of would-be good ideas.”

 

As with many aspects of society, the few can ruin things for the many.

 

Retailers spoke about different customer returns policies they have tried in the past, which should have helped give customers certainty and protection when making large purchases, but were actually scrapped after people abused the system.

 

Retailers I talk to continue to be surprised by aspects of customer behaviour – and there will always be unexpected events and unintended consequences as they launch and trial new propositions. Investing in unified commerce systems that allow retailers to stay on top of customer behaviour and help join up otherwise siloed business channels can certainly reduce some of the guesswork.

 

Pieter van den Broecke, EMEA Leader Supply Chain Commerce Strategies at Manhattan, said at the roundtable: “Retailers’ focus on returns is changing – it is less a problem mindset and more one of seeking solutions that are beneficial to the business.

 

“Every area of retail should be focused on creating a world class service experience in order to retain customers, and that includes how they manage the returns process. In fact, returns is one of the most important services retailers need to get right because it is such an emotive subject for shoppers.”

 

He added: “Retailers need a 360-degree view of their customer and good engagement across all sales channels to make this work. With a transaction no longer the end of a customer journey like it once was, the returns service retailers offer customers needs to be as good and as smooth as the e-commerce offering used to sell the goods in the first place.”