In the week where ASOS announced changes to their returns policy to reduce the cost of returns, and IKEA announced how they have adopted new approaches to embrace the circular economy opportunity, retailers and the academic team behind the recent ECR Report, "no such thing as a free return" met in London to explore the true cost of a return financial model, the role of lean thinking in returns management and the relevance of the circular economy to returns management. Three key takeaways were as follows:
- THE NEED TO CHANGE RELATIONSHIP WITH THE SHOPPER: While there are many ways to reduce the cost of returns, reducing the actual rate of returns, as high as 40% for one of the participating retailers, remains the most effective lever. However, there were no easy or obvious answers to the exam question, "how do you offer free returns AND at the same time reduce the returns rate?" Taking action on serial returners could be one action, however perhaps the bigger idea could be to explore the role of reciprocity? The theory would be that if consumers were to see and place a greater "value" in the free returns proposition could that then lead to a change in behaviour and a lower returns rate?
- SYSTEMS COMPLEXITY NEEDS TO BE REDUCED: Retailers who have added an omni-channel proposition to their traditional businesses shared the difficulty in working with old, multiple systems that are way too complex. The key to unlocking the value potential lies in the streamlining of data management and enhancing communications with customers/employees. As one of the participants shared, "working internally between the different parts of the omni-channel proposition is really hard, its a bit like trying to work with a different retailer"
- ORGANISING FOR CHANGE: Few of the participating organisations claimed to have a dedicated team, across the different channels, to holistically manage returns. Given the requirement for trade offs, fewer returns Vs more sales? Fewer ways to send back your returns Vs more choices and the chance to upsell? Recycling & repurposing Vs jobbing? an holistic approach is required that goes beyond functional boundaries, so that all parts of the business are engaged in any changes, especially the brands (online & offline), the buyers (sales), the supply chain (costs), the customer service team (store operations), marketing (brand proposition / returns policies) and loss prevention (loss & fraud) perhaps delivered by a natural work team lead by a Chief Returns Officer?
Based on the workshop feedback, and high interest, the ECR group will continue to invest in new research on product returns. This can include gathering benchmark data, exploring reciprocity and documenting the choices for organisation design. In addition, the academics will look to build on the insights and feedback on the true cost of a returns model, to present back to the industry a more intuitive model for retailers to adopt.
We plan to bring these new research insights, case studies and benchmark date to a follow up workshop in 2020, on April 2nd, in London. To register your interest please click here