What: Coresight reviews with SAP the options at hand to increase profitability on returns, which are usually dragging P&Ls down.

Why it is important:  There are several options which imply to distanciate from the  mainstream  options proposed, among others, by the market leaders who have the possibility to sustain the losses incurred by these options. This requires at the same time a strong branding and a real added value proposal to be accepted by final customers.

According to the NRF, retail returns in the US represented $761 billion in 2021, or 16.6% of total retail sales in the country, to be compared to 10.6% in 2020. This increase is mainly due to the increase of e-commerce, which contributes to increasing the return average since its own rate sits at 20,8% of total e-commerce sales.

For Coresight, retail returns affect consumer sentiment and loyalty as return policies are now scrutinized by customers before shopping (and, in some cases, customers are asking for a sustainable policy, which raises the costs). In order to remain profitable, several options are at the retailers’ hand:

• Disallow returns, such as offering discounts in exchange of keeping the product
• Offer returnless refunds, (these options are optimal when the cost of shipping, repackaging and restocking the item exceed the sale price of said item),
• Bundle returns to reduce costs and enhance sustainability (often by enticing customers to bring back the product to physical points),

Of course, the best method to prevent returns is to use data from previous returns to make the proper analysis and identify reasons for returns (manufacturing issue, ordering and merchandising issue, etc…).

How to seize the opportunities in retail returns