Navigating the Challenges of Returns Management
In recent years, the rise of returns has become a growing issue for retailers. As the industry continues to evolve based on consumer demand, retailers have recognized a need to focus on the customer experience across all sales channels.
This focus on delivering an optimum customer experience and providing seamless and low-cost returns has been part of this strategy. However, this has had a negative impact on retailers and their overheads. According to the NRF returns report, $761 billion in sold merchandise was returned to retailers in 2021, accounting for 16.6% of total US retail sales. This represents a significant increase from 10.6% in 2020, as eCommerce has impacted how customers shop and contributed to a lack of first-hand experiential shopping and additional returns.
Understanding the Returns Challenge
According to the same NRF findings, in 2022, retailers claimed that 30% of their sold items were eventually returned. Due to slow and outdated internal processes, returns can be extremely costly for retailers. When a product is returned, it goes through several stages of the reverse supply chain before it can be resold – taking weeks or months before heading back to the shop floor. As items spend more time off the shelf, the eventual resale price falls.
According to our latest report: State of Retail 2022/2023 Part 2: Returns Management and the Customer Experience, 42% of returned items are sold at a discounted price, with 12% not being resold at all. Respondents claimed that the average price reduction for items is approximately 38%. Many retailers believe that handling returns are simply a cost of doing business. However, as returns worsen, retailers must recognize the importance of providing a streamlined returns process that maximizes efficiency while minimizing costs.
Overcoming Ongoing Issues
When it comes to the underlying issues behind internal returns processes, our report found that 32% of retailers say spending too much time manually processing individual items is a significant challenge to their current returns process, while 26% blame a lack of staff to process returns. The ongoing labor shortage has brought these issues to the attention of retailers, with many stores now operating with fewer employees.
According to Deloitte’s retail industry report, the retail industry requires at least one million additional workers to operate efficiently, and with the increasing number of returned items across the industry, more solutions for processing returns are urgently needed. Modern retail technology solutions, such as item-level RFID, can help to streamline returns processes.
By deploying item-level RFID, retailers can track inventory effectively throughout their reverse supply chain and eliminate the time spent manually processing returns. Returns can be processed at faster rates and returned to the shop floor more quickly, increasing the possibility of selling items at full price while decreasing the labor required to process returns.
Optimizing Returns for the Ultimate Customer Experience
With the right technology, retailers can streamline the process of returning products and help preserve sales margin by ensuring they are back on the sales floor in a reduced timeframe. Through RFID, retailers can greatly enhance their omnichannel offerings. With visibility of all items being returned, at any location, improved fulfilment options such as buy online, return in-store can be applied, allowing customers to return items at their closest store. Not only does this provide a highly convenient solution for consumers, but it also enables retailers to elevate the customer experience and suggest alternative items for purchase.
To find out more about how SML RFID can help streamline your returns, download our 2022/2023 State of Retail Report Part 2: Returns Management and the Customer Experience, or contact info@sml-rfid.com.