Are high street retailers feeling the affect of online product returns?

For most multi-channel retailers, successfully optimising and refining their online Products Returns strategy, could be about to determine their physical High Street survival.

When it comes to juggling multi-channel retailing and managing Product Returns, Retailers looking to provide the optimum Customer Journey, are finding their flexibility come back to haunt them, back in the world of the High Street. According to a survey of store managers conducted by commercial property agency Savills and shared exclusively with Retail Week recently, almost half of all store managers (48%) said their shops accepted online returns.

And the result of giving the customer so many options?

One in three stores are being hammered by online returns, by having refunds given to customers stripped out of their sales figures, new research has found.

According to separate data from supply chain management experts LCP Consulting, more than £2.5bn-worth of online orders were returned to retailers between mid-December and mid-January 2018 alone.

Even if half of that order value, as determined by LCP Consulting, ended up being returned via stores, it would wipe out more than £400m of store revenues in the space of just one month.

Savills’ ‘Online Sales vs Online Returns’ report said:

“In addition to the deduction of online returns from a store’s P&L, the staff resource required to deal with these returns, as well as click-and-collect orders, can be significant”.

In addition to the negative affect on the High Street store P&L, there are two further and significant pressures to deal with as well:

  1. Many retailers operate their leases which are linked to turnover arrangements. Lease payments would remain high, with profits to pay them further being eroded under these conditions

  2. With a clear focus on improving the in-store Customer Experience, an ever more important factor to most High Street stores to manage this growing Returns problem, many retailers are ironically having to remove staff from the shop floor, while at the same time having to deal with the very thing that is hampering the store’s profitability – the deduction of online returns from its bottom line.

So where does Phoenix Digital fit into all this?

Around 5 years ago, Phoenix Digital developed a bespoke Retail Returns Optimisation Solution, which we have adapted for the likes of retailers Argos and Bush, to great success.

Via tailored digital platforms, we have been able to seamlessly integrate our Product Returns Optimisation Solution into our clients’ websites, which in EVERY case, has produced immediate improvements to the Customer Experience and massively decreased the actual number of returns.

This is achieved through an intuitive and dynamic information/support platform, which means swiftly and effortlessly, the consumer gains a depth of insight both prior to purchase AND at potential returns stage, which combine to reduce the need to actually return the product(s) by up to 22%, based on actual client statistics.

The results have been substantial to both the bottom-line and to the Customer Experience feedback, measured by: • millions of pounds worth of annual cost savings, • significant reductions on the internal time needed to train and apply time to managing the Returns Process itself • a significant increase in Customer Experience • most of our clients, who also have a physical high street presence as well (such as Argos), use the Phoenix platform as their internal customer support site, accessed online within the retail unit, to support customer queries Take a look at how it works: https://phoenixdigital.agency/#case-studies

And if you would like to see a second opinion of our experience operating within the digital product returns sector:

“Phoenix Digital have been a pivotal part of our roadmap with their Digital capabilities. They deliver on our visions and manage to turn ideas into reality within challenging timescales. They are a great company to work with.” Ian Fenton, Customer Returns Manager, Argos UK

If you recognise these challenges in your own business, don’t hesitate to get in touch with us.

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