Returns are killing retail profits, but who cares?
Tackling returns is complex and here is no single magic bullet. Often there is no one person or team responsible for minimising returns. And even when there is a named owner of “the returns problem” that person requires the buy in from teams across the full spectrum of the retail operation in order to be effective. Yet that co-operation rarely happens.
From the recent returns roundtables and discussions Clear Returns has hosted at Home Delivery World, IMRG and the Retail Forum, we’ve seen the same internal barriers occurring in retailer after retailer:
- Incentivising revenue targets over profits
- Failing to understand the margin impact of returns, including reselling returned stock at a loss
- Assuming a return to be a positive outcome for a customer
- All KPIs and performance metrics stop at the sale
- Accepting that high levels of returns are inevitable
- Lack of focus on shortening the period to get returned stock back on sale, including fulfilment of clean stock ahead of returned stock
- Lack of enforcement of existing returns acceptance policies
- Poor data visibility and lack of actionability from existing returns data
There is no fix to this without a top down approach. Nor can a single individual or team “solve” returns alone.
So why not turn the thinking upside down?
Is there a board of directors of any retailer anywhere that doesn’t want to boost profits, reduce costs and increase customer experience? Is there any management team anywhere dedicated reducing the profitability of stores and customers?
So what’s the problem?
Returns have become bogged down in the vocabulary and remit of operations and logistics. They’ve become someone else’s problem. It’s so easy to blame the delivery company, or those pesky customers buying two sizes of everything. It’s harder to acknowledge that ecommerce has changed how customers buy and that everything from buying strategies to marketing and stock coverage are being impacted.
So how about talking about keeps instead?
How can retailers co-ordinate buying, sales and marketing, fulfilment and service processes to ensure more customers keep what they buy and more sales actually result in a profit?
With a vision like that from leadership, those internal barriers seem a lot more surmountable…