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.

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.

retail sales and marketing blog image

Why measuring retail sales & marketing performance has to factor in returns

Marks & Spencer have attracted unwanted publicity in the last few days, as they have quietly adjusted their figures to reflect that their online sales over the past four years were £500 million less than previously stated.

Why? It all comes down to returns and how the business attributed them internally. Clear Returns regularly see retailers assign the full upside to the online channel – revenue growth, record sales figures, stellar marketing conversion performance – yet barely factor in the extraordinary downside, in the form of high returns. Frequently we see retailers like M&S fail to account for the full online returns picture, so returns to store and all the operation-wide associated costs of returned do not get fully reconciled back to the online business.  This matters.

Returns from online are far higher than in store. They can exceed 35% for UK women’s fashion (and exceed 60% for fashion in Germany).  Some of these goods are returned by mail or Collect+ – thereby incurring two way postage costs. But where the retailer has the store base, as half of online returns – or more – will get returned in store.  These store returned goods rarely go straight back onto the shop floor – the store may not stock that range, the goods may need cleaning or repackaging, so they often require sending back to central warehouses to be processed which can take weeks.  In the case of certain product categories – like electronic goods – they simply cannot be resold as new.  Write-off rates are eye watering and this impacts the bottom line.

Clear Reurns marketing reconciliationYet depending on the level of information available internally around returns, the online channel may neither incur the costs for a high returning campaign or product line, nor see the data that would allow them to make changes to the way they buy or market goods in future.

And its worth remembering, that M&S’s £500million over the last four years doesn’t include the cost of marketing to acquire the sale that led to the return, it doesn’t include handling costs, it doesn’t include lost lifetime value from the customer finally fed up with having to return yet another order.

Clear Returns customers – and Marks and Spencer’s are not amongst them – do not have this problem.  They can reconcile returns back to the orginal marketing activity.  They can remove problem products from promotion fast. They can attribute refunds and returns costs to the correct channel. And they can make business decisions that grow retained revenue – thereby profits – across their whole business, rather than over-rewarding one channels performance at the cost of the whole business.  Find out more

 

Clear Returns MetaPack Returns Webinar

Retail Returns Insights Webinar Available Now

Are returns a headache for your retail business?

Clear Returns invites you to listen to the solutions explored in our recent webinar with MetaPack, Returns: The New Battleground for Retail.

The webinar was a collaboration between leading industry professionals, Clear Returns’ CEO Vicky Brock and MetaPack‘s Commercial Manager David Staunton,  who discussed solutions around returns strategies and analysis, which has become an increasingly complex issue amid changing customer behaviour and a dynamic retail landscape.

E-commerce sales are experiencing significant growth, so much growth that, for many retailers, distance selling has become difficult to sustain with return rates as they are. Only 16% of retailers have said they’re able to profitably fulfil omnichannel customer demand, while some retailers are seeing their return rates grow faster than sales.

Clear Returns’ data analytics has shown that 1 in 3 fashion items bought online in the UK are returned, and in some geographies, such as Germany, that rate can go up to 60%. But it’s not only fashion retailers that are seeing too many products come back to the store. Clear Returns works directly with clients from electronics, to jewellery – delivering returns intelligence to all non-grocery categories.

Returns are a growing problem for retailers across sectors and channels, especially since the damage done by returns goes beyond the initial refund – up to 80% of first-time customers who return will never shop with that retailer again, resulting in a significant loss of customer lifetime value. During this major shift in retail, it’s essential that distance sellers focus on maximising their returns strategies and customer experience with innovative technology and proactive solutions.

To learn more about these returns trends and issues and how Clear Returns’ and Metapack can help you tackle them, listen to the free webinar.

Get in touch directly at info@clearreturns.com to discuss how we can help your retail business grow its profits by helping your customers keep more of what they buy.