It’s almost that time of year again: the holiday season brings a flurry of increased retail sales, inevitably followed by a barrage of returns. While US retail sales have been growing, so has the rate of returned goods. According to the National Retail Federation (NRF), consumers returned $428 billion in merchandise (about 10.6% of total sales) in 2020. In 2021, the numbers jumped to $761 billion (an average of 16.6% of total sales). Holiday gifts are returned at a higher rate than regular purchases. The NRF also reports that retailers expect an average of 17.8% of merchandise sold during the holiday season will be returned (and for e-commerce shops, the returns rate can be as high as 35%).
Returns are an important part of consumer relations. According to McKinsey & Company, 75% of retailers agree that returns are a necessary evil, and even more feel that lenient return policies are vital to revenue growth. However, returns don’t have to be the bane of your existence. Nor do they always have to be a losing prospect.
Is your store ready for the retail returns rush? Here are our top three tips that can help you stay better organized, reduce the financial impact of returns, and improve the customer experience.
1. Establish Separate Return Areas
Frictionless returns experiences are a major factor in consumers’ opinions of a retailer. According to a 2020 report, 76% of first-time buyers who have an easy returns experience say they are likely to shop with that store again. Thirty-three percent of repeat customers are willing to abandon a retailer after a difficult return experience.
In-store returns are the most efficient in terms of processing time and increased likelihood that an item can be restocked and resold at full price. And even online buyers can be nudged into the store: 62% of consumers are more likely to shop online if they can return an item in-store. One way to make in-store returns easier for customers is to have a separate checkout area just for handling returns.
Now, we know what you’re thinking — that retail space, especially checkout counter space, is at a premium. But given the likely volume of incoming returns, having at least one specific checkout terminal devoted to handling those transactions will ultimately be more efficient. As a result, you will shorten checkout line wait times and keeping customers happy.
Plus, the right retail technology can help you provide convenient returns with minimal space requirements. A mobile point of sale (POS) solution or a sleek, compact all-in-one (AIO) station would be an excellent choice.
2. Utilize Inventory Management Solutions
Your retail technology should have not only a space-saving design but also robust functionality. This is especially important when it comes to inventory management during the high-flux holiday and post-holiday season. Dealing with so many products being sold and then returned or exchanged can be a headache. But with the the proper software, you can manage it all. These comings and goings can be especially difficult to track for retailers with omnichannel sales.
Be sure you have a POS solution that automatically tracks your inventory across multiple locations and sales channels. This will eliminate the risk of lost inventory, overstocking, or stockouts. The ability to check inventory within your store and at other locations can be invaluable in facilitating exchanges. For example, if a customer wants to return a sweater that is the wrong size or color, you can help them find the right one to exchange or substitute. As a result, you preserve the original sale instead of having to refund.
Consider incorporating this software on a tablet solution that can go with you as you walk through the store to manage inventory and check on customers. A mobile POS device can also move easily between checkout and return counters as needed.
3. Leverage Your Returns
Retail returns do not have to be a total loss of revenue. Instead, they can be opportunities to win new customers and encourage repeat business, increasing a customer’s lifetime value. Make your returns process as easy as possible, and be sure to advertise that fact. Shoppers will buy with more confidence if they see a clearly communicated, hassle-free returns policy. And they do look for it: 67% of shoppers check the returns page online before making a purchase. A good returns policy can thus become a growth strategy.
Revenue preservation is also more likely if you can get buyers into the store: 71% of in-store returns result in an immediate purchase. Offering instant store credit or discounts for same-day purchases, as well as using your inventory management tools to help customers find substitute items, can increase the likelihood of additional spend beyond preserving the initial sales profits.
Find the Retail Technology That Facilitates Returns
Retail returns might be a necessary evil, but you can make the most of the situation. Have the right technology and know how to use it to make your return rush as simple as possible — taking the pain out of the process for the customers and for you.
Contact us to learn more about POS solutions that will get you through the holiday season and keep on building on your business growth.