Easter bunnies beware: the peak trading woes aren’t over for retailers as returns still roll in

The aisles may be packed with chocolate and the Christmas decorations long since packed away, but the festive season continues to impact the retail sector, in ways that businesses may not have accounted for.

This is because retailers have calculated their performance on sales alone – what customers bought in-store or online – rather than what they chose to keep. Returns are a £60 billion problem for the UK retail industry alone, and will be further eroding results of what was already a weak Christmas for many organisations.

For many retailers, this year’s festive figures told a sorrowful story. December’s unseasonably warm weather impacted sales in the fashion sector, with Next – usually the barometer of Christmas success – only seeing sales rise 0.4% year on year, while Primark, Bonmarché and Marks & Spencer all reported losses.
Even strong performers like John Lewis, which experienced a 7% increase in sales over the festive period, or Debenhams, which recorded a 3.5% sales rise, are not immune from the cost of returns – particularly from online shoppers.

The steep adoption of online shopping is, in fact, making matters worse and ecommerce has a much higher return rate than items bought in the store. This is often due to an expectation gap between what the customer thinks they have ordered and the reality of their purchase once it arrives.

Almost £1 in every £5 was spent online in December, according to British Retail Consortium, with web sales up nearly 20% on last year. This will have brought a flood of returned, unwanted products into stores during January and it may not be yet over, as under the Consumer Rights Act, shoppers now have 30 days to send back an item and receive a full refund if it is faulty or sold ‘not as described’. Stock returned during January sales results in valuable margins being lost, as once the item has been processed it will return to the shelves at a reduced cost.   That is all too apparent in the results currently being reported.

Our data showed that the total estimated cost of returns to retailers from Black Friday reached £180million. This figure increased further as retailers processed unwanted Christmas gifts. This issue will be hitting some businesses harder than others; around 30% of multichannel women’s fashion is returned, for example.

And many retailers will still be dealing with the repercussions of peak trading returns, having put them on the backburner to concentrate on sales.

A key peak trading lesson for the retail sector is that the sale isn’t over until the customer has decided to keep the item. Retailers’ number one task for 2016 should be to recognise the true cost of returns and work to understand why items are not being kept in order to secure and boost realistic profits.

Want to know how your returns stack up against the market? Access our new free returns benchmark reporting tool.

Playing For Keeps – keep stock sold over the peak trading period

 

Keeping stock sold – avoiding returns the key to retail profits

The sales figures over the peak trading periods of Christmas and Black Friday may make the headlines, but those returns coming back over the next 28 days will cost retailers millions…and often get ignored.

It’s time to get the facts.

Playing for keeps…

Clear Returns new Playing For Keeps report offers the facts around returns on Black Friday, peak season and beyond. £160 million of Black Friday stock is set to be returned, stock that will then be unavailable to sell during the most critical trading period of the year…Christmas.

Playing For Keeps is more important than ever as it is not really a sale until the customer decides to keep it. Returns kill retail profits and Clear Returns presents the facts that the wider retail business simply cannot afford to ignore:

 

Clear Returns can help retailers regain an extra £1 million for every £10 million returned, statistics which make Clear Returns one of Europe’s  top tech scale-ups according to The Telegraph.

Expert insight…

Clear Returns CEO, Vicky Brock, explains why Black Friday could end up being a short term gain but long term loss for many retailers:-

“Forget the headline-grabbing figures of what analysts say people are going to spend on Black Friday. That’s just the beginning. The real concern is that the event could end up costing retailers money rather than boosting their profits.”

“This is because the spike in sales from November 27 will be followed, for many businesses, by an increase in returns – and profit is only generated when customers decide to keep their purchases. On average, 14 per cent of all consumer electronic sales are sent back, and in the build-up to Christmas in particular, this can cause all manner of logistical headaches and lost margins.”

Talk to Clear Returns now to help your customers keep more of what they buy – and keep buying.

Jo Swinson joins Clear Returns as Non-Executive Director

Jo Swinson

 

Clear Returns appoints ex Government Minister, Jo Swinson, as Non-Exec Board Director

September, 2015 – Glasgow, UK – Leading retail returns intelligence solution, Clear Returns, today announced the appointment of former Business Minister, Jo Swinson, to its board as a Non-Executive Director.

Clear Returns, a predictive analytics service, was founded to help retailers prevent and minimise product returns, by enabling customers to keep more of what they buy.  Its intuitive use of data allows retailers to predict, identify and act upon high returning products and the triggers behind what is making them prone to refunds.  This means retailers can reduce the margin drain of returns and model their profits more accurately.

As a former Minister in the Department of Business, Innovation and Skills, Jo brings extensive insight across the key areas which underpin Clear Returns’ business, including marketing, consumer affairs and fulfilment.

Having driven change across the competition landscape, corporate governance, customer rights and postal services during her ministerial tenure, Jo is well placed to advise on key challenges facing businesses and shoppers, and how Clear Returns’ innovative data analysis can provide solutions.  As an architect of the 2015 Consumer Rights Act and the Consumer Contracts Regulations 2014, which extended consumers’ rights to return goods bought online, Jo brings an inherent understanding of the problems product returns create both for shoppers and retailers.

Commenting on her appointment, Jo said: “The UK is a world leader in ecommerce, with consumers increasingly confident shopping online.  This presents a brilliant opportunity to grow sales, but the increasing rate of product returns represents a hassle factor for consumers and reduced profitability for retailers.  Clear Returns makes it easy for retailers to use returns data to improve business decisions.  Better targeted marketing and early identification of problem products will enable companies to reduce unnecessary costs and be more responsive to their customers.”

Julie Ashworth, Chairperson at Clear Returns said: “As we look to grow the business further, it was important that our next appointment to the Board brought both sound industry insight and strong business acumen, alongside marketing and PR experience.  Jo brings all this and more; no stranger to dealing with the very issues that shape industries, she will be an asset as our business looks to help retailers cut the £400billion problem that returns presents to the retail sector globally. We are delighted to be working with her in her role as a Non-Executive Director to the board.”

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About Clear Returns

Clear Returns enables retailers to cut the growing cost of customer returns, currently running at an average of 30% of multichannel orders in women’s fashion.

Our advanced data intelligence can detect problematic returns before they escalate into a serious cost-draining issue, enabling retailers to take preventative action. We don’t rely on historic data to analyse what went wrong after the event.

Through our solution, retailers can not only identify why customers return goods, but make changes in their product marketing, order management and fulfilment processes that ensure customers keep more of what they buy

Our award winning returns intelligence platform merges key data from ecommerce, stores, and warehouse systems to provide a consolidated and predictive view of the impact of returns on overall performance, along with prioritised, actionable outcomes. This means marketing, customer service, content management and even buying and discounting decisions can be based on intelligence that will grow ‘keeps’ and therefore grow profits.

 

For further press information, please contact Sarah Stevens at Fieldworks Marketing on:

sarah.stevens@fieldworksmarketing.co.uk +44 (0) 1892 786 914

 

Posted by / September 28, 2015 / Posted in News

Returns & why they should be on the retail CSR agenda

It really pains me, and I know it pains many people, to see the sheer amount of packaging and waste that goes into a delivery of a product ordered online.

I realise there’s a trade-off between the amount of packaging in the box and the quality of it on arrival. You don’t want to compromise on the packaging to the extent that the delivery arrives damaged, so it’s safer to over-package.  But of course, that has a huge cost and environmental impact.

These hidden social costs are even extreme when there is a return involved.  E-commerce returns for fashion in the UK average 30%. They can exceed 60% in Germany. You’ve got the customer opening all of this, so the packaging is very rarely in a condition that can be reused or salvaged for a future despatch. Not only that, if there is a return in that package, the shopper is going to be repackaging or bundling it up to go back in a van to go back to a warehouse where it’s got to be opened, cleaned, repackaged and finally made re-available for sale. That may involve it having to be transported to a different warehouse or back to store.

There’s potentially a significant loss of margin in that process. Packaging, road miles, you know, environmental impact, social impact all the way through this process of a return, yet alone the business impact from things like reduced margin, poor customer experience, and impact on profitability.

CSR and returns

It is this aspect of the social, economic impact, environmental impact of a return that both the shopper and the business are failing to give adequate consideration.

I believe a retailer serious about its CSR (Corporate Social Responsibility) will be arguing to the rest of its organisation, arguing to the board, ideally even educating some of the customer base, that returns at their current level are not sustainable. You are not doing anybody a favour –  including the customer when you are incentivising them to return and shop with the intention of returning  – because there are all these hidden costs.

These hidden costs are not necessarily borne by the retailer. They’re not necessarily borne solely by the shopper but they are ultimately borne societally. The cost of a van going two or three times to deliver a parcel because customers are frequently out, the cost of then picking that parcel up from the post office, or from the customer, back to a central warehouse, the cost of all the stuff that’s going on at the central warehouse, the product then being shipped by road to another warehouse where it gets back into the supply chain. The cost of buying more stock than required, simply to keep availability due to the sheer amount of stock out on loan.  And the waste involved in packaging and re-packing the same item time after time.

Potential impact on consumer behaviour

It is common to see returns having  a £30+ cost associated with them and that’s just direct costs of the handling, delivery and packaging, let alone externalities of environmental impact and waste. What I would like to see is organisations like John Lewis, Marks & Spencer’s and IKEA, who’ve been very forward in talking about CSR, environmental impacts and how they’re doing ethical sourcing, to also start talking about ethical returning.

Incentivising people to buy more and more, and return more and more is not, in my view, sustainable or ethical, and I think if the shopper was more aware of how much product goes literally into landfill, the r0ad miles generated, how much packaging goes to waste, how much stock gets cleared off the jobbers for disposal at a fraction of the cost price – they would be concerned and they would probably look at their own returning decisions.

Focussing the CSR agenda to include returns

I work in this industry, I’m obsessed with the data and I’m aware of what’s happening – but very, very few people are. So, it’s really important to me that returns get on the agenda of corporate social responsibility and that this is one of the things that CSR directors and retailers are talking about in the coming years.

Because returns at this level are not sustainable for anybody, not at business level, not on an environmental level and not at a wider society level.