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After the crazy busyness of the holiday shopping season comes…the crazy busyness of the returns season. It is estimated that up to 25% of all returns happen in the period between Christmas and the end of January. That’s a quarter of all returns squeezed into around 10% of the shopping year. 

The National Retail Federation’s (NRF) figures for the 2021 ‘returns season’ states that up to 13% of total sales in the US were returned – that is over $400 billion of goods. The percentage is higher online – up to 20% of all purchases via ecommerce solutions are returned.

The reasons for returns vary:

  • Unwanted gifts – particularly in post-Christmas period, many returns are the result of a gift that didn’t hit the spot.
  • Impulse buysoften fueled by the massive discounts of ‘Black Friday’, which has seen the ‘returns season’ start as early as November.
  • Planned returns – the growth of online shopping has dramatically increased returns. Shoppers deliberately over-order, use their home as the changing room, and plan to return the sizes/colours they don’t want to keep.

Not surprisingly, the biggest source of returns is wearable items – with the top five being clothes, men’s dress shirts, shoes, make-up, sports apparel.

Returns Management: Returns drives sales and satisfaction

Returns management is an integral part of the overall customer experience and your returns policy is therefore an important element. As many as 92% of consumers say they will return to a retailer if they have a positive customer experience with returns, and they can generate an opportunity for cross sell/upsell. 

But managing refunds can be costly and time-consuming. NRF tells us that in the US, the cost of managing returns of $400 billion of goods is $101 billion – that’s a massive 25%. It is estimated that in the UK, the average return passes through seven pairs of hands before it is back on the shelf.

In-store vs DC – the pros and cons

  • Returns to the distribution centre – require sophisticated reverse logistics and the appropriate space and staff to manage the influx of goods. DC returns carry the risk of slowing down outbound operations and therefore customer experience and future sales.

  • Returns to the brick and mortar store – the top choice for customer experience, with 64% of shoppers saying they find retail store returns the most convenient. Brick and mortar store returns tend to incur lower costs, and, crucially 54% of shoppers say they have made an additional purchase in-store while returning an item, so retail store returns help to mitigate the financial impact with cross sell/upsell. 

But in-store returns can lead to stock imbalances, with more stock of an item than the store would normally hold.  So what are the key things that retailers can do to ensure they’re managing returns efficiently?

  • Take a strategic approach – it’s important to see returns as an intrinsic part of your overall customer experience strategy. Talk to an expert for help with planning your returns approach and processes.
  • Flexible in-store POS – your returns process will depend on having the right retail technology. Retailers need to ensure that they have a flexible POS that can process returns, including managing refunds and loyalty. You may want to use mobile POS so that staff can process returns on the shop floor, without generating queues.

  • Loyalty program – refunds don’t only involve cash, so your returns process has to integrate seamlessly with your loyalty program. If the customer has earned points on the transaction, they need to be removed, and if they have redeemed points, they need to be returned, or replaced with a voucher.

  • Inventory visibility – arguably the biggest headache with returns is getting the goods back to where they can be sold. It’s essential to be able to manage inventory in one place, so that you know exactly what is where and can move the returned items to where they need to be. Flawless inventory management is essential to a smooth returns process.

  • Training and processes for store staff –  retail store returns, can positively impact customer experience, and they offer the chance to sell an alternative item. So returns management is essential; having a smooth and swift returns process; training staff to use them and to cross sell/upsell, so that you can turn a return into a sales opportunity.

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