In the not-too-distant-past, the only acceptable reason for consumers to return a shop item was if it was broken. This was particularly prevalent in the weeks after Christmas, a time when not all gifts are loved and welcomed by family and friends. But for the most part, shops frowned on returns and would often go out of their way to make the process difficult and uncomfortable for the customer.
Today, shoppers’ demands are changing: they want their goods faster and with the ability to mix online, in-store and mobile channels to buy, try and return items in ways convenient to them. As such, returns are playing an increasing role in a customers’ shopping journey, and retailers need to quickly adapt their omni-channel strategy to ensure they don’t lose out on potential sales.
The returns culture has jolted sideways, as shoppers are able – if not encouraged – to send items back as an incentive to engage with a retailer in the first place. Shoppers are much more comfortable ordering three items of different sizes to work out at home which one fits them best. It has been labelled “taking the fitting room home.” In fact, new online retailers such as Zalando have made returns key to its business model.
With the increased demand in the returns culture, how can retailers cope under pressure? Enter digital. Enter multiple channels of order and fulfilment. There’s no denying that we live in an increasingly digital world. Everything we want or need can be obtained with just a click of a button or swipe of a finger. But as technology advances, consumers gain more and more power – and with more power comes higher expectations for a great customer experience.
The great customer experience needs to carry over to the digital as well as be present in the physical. So, as online shopping continues to grow at a rapid pace, retailers’ supply chains are forced to keep up with demand and provide unprecedented levels of convenience to help businesses drive customer loyalty and achieve consistent revenue streams. This is where the popularity of click and collect comes in. It’s a neat compromise for shoppers and retailers: shoppers get near instant gratification while retailers benefit from reduced delivery charges and less issues in the delivery process. This is because they are delivering goods to the stores rather than multiple customer’s addresses.
However, with the rise of click and collect – retail staff, who deal with locating and handing over customer parcels, are also seeing a vast increase in returns. Indeed, click and collect’s best practice is to let customers try out their goods on the spot. This way, if they are likely to return them, the items can then go back into stock as quickly as possible, minimising opportunities for damage or loss.
Given the above, it should be acknowledged that returns can be problematic for the retailer. With stock going out and being returned through a variety of channels, retailers need to be on top of their inventory management and have real-time visibility of their stock levels. Knowing where returned stock is and where it is wanted is important to accelerate order fulfilment and to reduce unnecessary stock holdings.
There are many steps, underpinned by technology and common sense, to ensure retailers can deliver a smooth and seamless customer returns policy.
It is vital that retailers actively encourage shoppers to return goods to their nearest store. This will enable shops to be able to place undamaged stock back to the shelves as soon as possible, supporting sales and revenue.
Retailers should encourage multi-channel returns options, comprising in-store, lockers or via pick-up. Once goods are returned, shops should use scanners, mobile computers or Radio-Frequency Identification (RFID) to keep abreast of available stock for the next transaction of the item in question. The use of inventory visibility is to be encouraged, so goods can be sent efficiently and effectively, where they are required to be.
Currently, brick-and-mortar stores are under tremendous sales pressure. This is due to the growing popularity and adoption of e-commerce, and – more recently – the click-and-collect retail business model, making it a necessary move to shift their business online. Retailers worldwide lose a staggering $1.75 trillion annually due to the cost of overstocks, out-of-stocks and needless returns, according to retail analyst firm IHL Group.
In these challenging times for retailers, it is vital that a coherent returns policy is adopted. This is all about the smart use of technology including mobile devices, handheld printers, personal scanners. Additionally, interactive kiosks should be used to manage returns, which can be facilitated through enabling barcode scanning, label printing, bagging and parcel drop box all within one space. This helps create personalised experiences that improve the customer experience and keep shoppers coming back. This is vital as retail profit margins continue to be squeezed now and in the future.
Mark Thomson is director, retail and hospitality EMEA at Zebra Technologies