The value of being clear on what is a regretted return in retail

Or they aren't sure which jacket to order because: their size fluctuates; they’ve never worn this style before or shopped this brand or line; and the item is at risk of selling out so they’d prefer to buy multiple options now than risk getting it wrong and having to wait for the right size or, worse, miss out entirely?

And don’t even get me started on jeans… 

An important distinction

This is an important distinction, because if you know what types of returns behaviours you’re trying to encourage and which ones you want to discourage, you can adapt your returns proposition accordingly and start to optimise the volume of returns based on what customers truly value and what you deem to be an acceptable cost based on current market conditions.  

It might sound obvious, but we see retailers failing to be clear on this all the time. The question they need to consider is: what returns behaviours should we be encouraging, even marketing to attract customers? And what should we be discouraging?  

The cost of confusion  

Without this clarity, retailers face:  

• An increasing volume of returns, which our latest whitepaper reveals already make up a retailer’s biggest supplier and can cost 6% of the RRP of all sales. 
• Missed opportunities to win customers, because the returns proposition isn’t tailored to modern-day shopping habits or what customers truly value.  
• Poor results from propositions and tools aimed at preventing returns – such as intelligent sizing and virtual try-on technologies, augmented reality apps, and tags or packaging that invalidate a return if they’ve been removed.   
• Buying, merchandising and supply chain teams aren’t aligned as to which returns and returns channels are good or bad for business, so they tend to focus on prevention at the expense of customer experience.  
• Colleagues (in both stores and customer service centres) are unsure how to interact with customers returning items or how strictly to follow returns policies.   

Defining regretted returns 

The definition of regretted returns won’t be the same for everyone. Retailers should consider:  

1. The proposition – what do they want to be known for, and what elements of the returns proposition drive the greatest return in customer acquisition and loyalty?  
2. Customer expectations – the competitive dynamics of certain market segments and price points (e.g. premium).   
3. Available channels – returns to physical stores that are managed well can drive incremental sales for little cost. 
4. Product characteristics – for some categories, returns may be an essential part of the shopping journey that needs a frictionless experience, for others they should always be avoided.  
5. Reason for return – irrespective of the proposition and product, some reasons for returns should always be regretted e.g. failures to describe the product accurately. 

Only then can retailers align end-to-end – from buying and merchandising through supply chain to stores and online – and create a coherent returns policy and proposition, start to drive down avoidable returns and make the others an enticing part of their value proposition. Shoppers might even start to feel more positive about the prospect of buying a new pair of jeans online.