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Changing consumer behaviour and thinning margins mean that a robust returns system is non-negotiable for retailers

Rapidly shifting customer behaviour, and increasing product lines, is further challenging retailers to respond to the growing volume and complexity of returns.  Customers are now better informed and expect better service, both online and in-store.  Retailers are required to respond sooner rather than later by building robust returns processes, returns policy management and processing capabilities, if they are to mitigate further erosion of their margins.

 

Retailers have begun to look ever more closely at the volume of returns and the 360° process it entails, with many now trying to stop the returns process from ever reaching the Returns centre, by creating new policy management tools.  These can often involve creating a specialist technical team, who can exercise their expertise at the till, speeding up the whole process.  Tesco is one brand that now has technology gurus in store to share their expertise and reduce the amount of returns volume they have to deal with, whilst simultaneously giving the customers an even greater service.  Despite new ways of dealing with customers on the Returns side, there is no denying that volumes are increasing and the forecast for the next few years does not show any side of this trend abating.

 

 

Overall, retailers experienced flat sales in the 2013 Peak, with volumes stable and online escalating (around 17%, courtesy of IMRG CapGemini research) but on the flip side, store sales were down - hit by bad weather, bad publicity for the ‘decline’ of the high street and a growing downturn trend.  Complimenting this set of figures, is the clear view that the increase in online shopping will inevitably lead to an increase in returns, as, unless the buyer has been showrooming, the first time they will see their product in the flesh is upon delivery.

 

The ultimate goal for e-retailers, in an increasingly complex ecommerce world, should be to achieve maximum recovery through numerous routes.  All returned product has value, but that value inevitably decreases every week it sits in a distribution centre taking up space. Research shows that returned items lose value each week they are dormant, something that cannot be ignored.   The volume of Returns is growing, with more disposition routes available than ever, stressing the urgency and impact of margin erosion. 

 

Despite retailers’ efforts to reduce the value of returned items, the quantity of items being returned is on the up – a trend that looks set to continue.  For speed and simplicity of tracking, retailers need a system-driven operation to achieve the levels of productivity and data capture to reduce margin erosion.  The key to holding all the ‘Returns processing’ cards is sourcing the right capability and complexity for their systems ; protecting margins, achieving maximum recovery through a multitude of channels, and most importantly, being able to choose the right onward route for the product.  The returns data captured by the system is also an essential tool for buyers and merchandisers looking to help manage the cost of sale.

Retail trading is driving the complexity of returns and it will take a robust and agile system to cope with the complexity of the future of Returns. The best and most appropriate route is what will create the least margin erosion for retailers.  To achieve a forward-thinking Returns strategy, retailers increasingly need to use a system that has the flexibility to deal with complex Returns processing whilst capturing data and creating insight.  Do your Returns processes save you money on each product?  Returns are now top of the list for many e-tailers, recognising the volume growth potential in this part of the industry and ultimately the financial impact of the whole process on their bottom line.  Can you, or more importantly the future of your e-tail business, deal with the repercussions of not choosing the best Returns system for your needs?

 

Duncan Licence, IT Director, iForce.