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Retailers wrestle with problem of multichannel returns

Industry experts have warned that the full impact of multichannel returns is only just starting to be felt, as retailers struggle to reconcile in-store and online returns.

This week Marks & Spencer revealed its online sales over the past four years were £500m lower than previously reported, as returns made to stores were not taken into account.

Omnichannel or multichannel retailing has unleashed a whole raft of new world challenges for returns,” said Tony Mannix, chief executive of Clipper Logistics. “The reality is that you now have customers buying from wherever they want, with the boom in click-and-collect, buy online and return to store, which is great for the consumer but it can leave retailers with inventory all over the place.

“The challenge is how you get it into the right place in a saleable condition in a timely manner.”

M&S has been reporting its online sales on a pre store returns basis since 2007 and this year moved to a post store returns basis. As a result, it revised its online sales in the year to March 31, 2014 down £151m to £649m, although the changes do not affect overall sales or profits.

“We see this kind of thing a lot, especially with multichannel retailers,” said Vicky Brock, chief executive of retail technology firm Clear Returns, which works with businesses including M&Co and plus-size womenswear etailer Navabi.

“It is not uncommon to see a retailer reporting that some stores are trading at a negative at certain times of the year because they have a particularly high burden of online returns.”

She said few retailers have the capability to reconcile the full cost of returns – including marketing activity, getting the product from the customer and getting it back to a state and location that it can be sold again – to their online businesses.

Neil Sansom, omnichannel director at Moss Bros, said:  “We’ve always used post store returns figures and it seems strange that M&S was penalising the stores and masking their performance, in favour of online.

“The big issue at the moment is how you handle those returns –we see it as a cost of doing business but you have to be on top of it. If it is a product that is returned to store that we didn’t stock in that store, it’ll be sent back to the distribution centre for reprocessing.”

He said Moss Bros welcomed store returns, which make up around 25% of total online returns, for the customer interaction.

Colin Temple, managing director of Schuh, said half of its online returns come back to its stores.

“On the one hand this gives you the advantage of having a face-to-face conversation with customers so you have the opportunity to change for a different size or cross-sell. On the other hand you can get lines back into stores that don’t stock them as there is a much broader selection online. If you’re not good at moving stock around you may suffer.”

Brock said the situation is getting worse because online sales and the corresponding returns are getting higher, but also because customer behaviour is shifting.

“There is a growing group of customers who don’t regard it as a sale at the point of purchase, but only when they decide to keep it, so the volume of returns is increasing.”

Readers' comments (1)

  • The biggest issue that needs addressing is helping match the right clothes to the shopper in the first place. By so doing reducing the extent of returns.

    Retailers are spending lots of money on systems to manage returns but missing the opportunity of reducing them to start with...

    Unsuitable or offensive? Report this comment

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