woman in mask accepting a package

Entering 2020, the retail world was already dealing with tremendous growth in merchandise returns, with fraud and overall costs to the retailer increasing at an exponential rate due to the growth of online sales. In 2015 the total value of merchandise returns was estimated at $643 billion globally. By the end of 2019, this figure had increased to over $1 trillion worldwide.

Every return is a loss of margin to retailers. Even if the item can be resold, the increased labor of handling the item to resell at full price causes margin loss.  When items must be discounted, this further exacerbates the problem.  Overall, retailers lose between 5 to 8 points of margin on each product returned even if it can be resold.

And then COVID-19 happened, stopping many parts of store-based retail cold. Retailers now have to deal with an economy that was all but shut down for two months and all retail sales in certain categories were online. Most retailers stopped taking returns and this has created a tremendous backlog of returns.

The pandemic shutdown and subsequent reopening have given rise to a tsunami of nearly $200b of returns that is about to crash on retailers in the next 30-60 days at a time when retailers are most challenged financially.  They are dealing with return volume similar to post-holiday the post-holiday period, but without the benefit of increased sales before the heavy returns.

How do retailers move forward? What are the best practices? What solutions provide the most value?  What items do you not even take back?

This is the topic of a new research paper and webinar from IHL Group called “The Coming Retail Returns Tsunami.”  This research and webinar will review the challenges that retailers are facing and the policies that are working.  It will also review how the push to online sales and the closing of dressing rooms will further exacerbate the problem with some categories experiencing returns up to 50% of sales.

Often the optimization of the new digital journeys can be the difference between being able to maintain a profit on the item (if resold) vs losing money on each item returns.  IHL Research has shown that when retailers optimize their returns process, they can eliminate 70% of the associated costs that reduce margins for those retailers who have not looked at this area of their business for optimization.  Further, the optimization in this area is often a characteristic that differentiates the retail winners vs below-average performers.  62% of retailers growing their businesses at faster rates than average have taken the time and spent the resources to optimize their returns.  Only 39% of below-average performers have made this investment.

Microsoft is sponsoring this webinar and research to discuss how the right tools can help reduce return fraud, how optimizing the reverse logistics process can save several points of margin and how to create the right policy and procedures that are safe for your associates and customers while maintaining or even improving relationships with customers.

Please join us by registering for the on-demand webinar.