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How central are returns to your multichannel strategy?

With multichannel retail booming and a growing focus on serving markets overseas, returns represents a major challenge for fashion retailers and brands.

However, industry sources tell me that many are overlooking what should be a key part of their multichannel strategy – returns. When consumers shop online they can’t try the clothes on, so are more likely to purchase a size up and a size down, before eventually returning the two that aren’t right. This is convenient for the consumer, but for the brand or fashion retailer dealing with a large volume of returns this means that a significant amount of their working capital is tied up in returned stock.

For example, online fashion retailer Shop Direct Group, which owns e-tail businesses Very, Isme and Littlewoods, handles £0.5bn of stock in returns every year. This makes returns the largest single supplier to the business.

And given the seasonality of fashion products, reprocessing that stock and getting it back out onto the shop floor quickly is essential, because otherwise the brand or retailer could miss the opportunity to sell that garment.

Add into this the complexity for some UK fashion businesses of serving multiple markets internationally, and the potential for returns to become out of hand and costly is all too real.

The failure to ensure that consumers first get their refund in a timely manner and that the returns transaction is handled well, could potentially be brand damaging should a customer take to a social network to vent their fury.

And that’s not the only issue. At one of our recent roundtables one of the issues discussed was the issue of counterfeit returns, with instances including consumers buying high value items, removing the label and attaching it to a similar lower-value item, and then returning the latter. So there need to be robust processes in place to deal with this.

With returns at many online womenswear fashion retailers averaging between a sizeable 30 and 40%, returns will have to creep up the strategic agenda of fashion businesses if they are to remain competitive.

For more on the issue of returns make sure you read Drapers’ November 2 issue, where we’ll be exploring the subject in greater depth.

Readers' comments (1)

  • I would echo all of James' points in this article. Too many retailers are focusing on optimizing for sales and not for profit, and as they seek to grow online and international sales their return rates will increase, as will the associated costs. In speaking with retailers, many of them are beginning to realize that they need to take action.

    Central to this is a fundamental change in customer behaviour. It has never been easier for customers to buy anytime, anywhere, meaning to them the point of sale is no longer when they purchase, but when they actually decide to keep something.

    Ellie Turner
    Clear Returns

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