Why returns can be the key to a successful sales season
Andy Brian, partner and head of retail at Gordons law firm, examines the growing importance of a robust returns policy in securing the success of Boxing Day and January sales
Another year, another Black Friday. While consumers eagerly anticipate the bargains expected on November 24, electrical retailers are bracing themselves for the headaches that this seasonal event can bring. From logistical challenges and staffing dilemmas, to the inevitable influx of returns – no retailer will need reminding of the pressures that such a dramatic spike in sales can deliver.
All this, of course, is against the wider backdrop of economic uncertainty, rising inflation and dwindling customer confidence. Just this month, the BRC recorded the weakest growth in non-food items since records began in 2011. It is any wonder more and more retailers are spreading the load and extending Black Friday into weeklong promotions – or even scrapping the promotion altogether?
One of the biggest problems with Black Friday in recent years has been the potential impact on traditional Boxing Day and January sales. Are people spending all their money in November, instead of waiting until after Christmas?
IMRG reports that a total of £6.45 billion was spent over a weeklong Black Friday period last year (including Cyber Monday), but this was still eclipsed in the traditional post-Christmas sales, including a record £3.93 million spend on Boxing Day alone. In addition, research from last year shows 31 per cent of shoppers did not feel the deals on Black Friday were any better than other sales throughout the year. All of this suggests there is still a place for both events, even within the space of six weeks.
However, there is another important consideration that more and more retailers are switching onto this year – returns.
Return to sender
Last year, an estimated £1bn of online orders were returned following Black Friday and Cyber Monday, as consumers adopted a ‘buy now, decide later’ attitude, instead of braving the high street. We can expect more of the same this year.
This record amount of returns meant up to one fifth of items were left in warehouses or postal sorting offices (or even in the spare room waiting to be posted) between the start of the Black Friday period and the New Year. One returns provider even went so far as claiming that Boxing Day sales would be ‘ruined’ due to a lack of stock.
Of course, this wasn’t the case in reality, but it does reiterate the importance of a robust, customer-friendly returns policy – not only for positive brand perception and customer experience, but to meet operational challenges during the critical festive period. Without it, retailers could be left unable to maximise Boxing Day and January sales.
Implementing a returns policy is not always straightforward, especially with the growth of online shopping.
Cost is inevitably the most important consideration and often the question for any retailer is whether to offer prepaid returns or not.
Prepaid returns using a service like CollectPlus or myHermes have become commonplace in fashion retail, where the attitude of ‘buy now, decide later’ has become the norm, but it is not unusual even for electrical retailers to offer a convenient, prepaid service in order to compete. The additional cost following a sharp spike in sales, for example after Black Friday, cannot be ignored.
With all of this in mind – and with one eye on stock levels going into the January sales – one of the most interesting developments in recent times is the introduction of same-day returns.
A number of brands, including Asos, Nike and Nespresso, are reported to be in talks to launch the service, which some claim will change the way we shop online. If it proves successful, no doubt many others in the electrical retail sector will follow suit.
The idea is simple. Consumers can book a return at a time and place to suit, at which point a courier will collect the item they want to return. It has already proven successful with same-day deliveries, so why not same-day returns? Especially when you consider the benefits for retailers, too.
Same-day returns could ensure a quicker turnaround, fewer returned items in warehouses and less chance of stock issues, even following a big spike in sales. Just what is needed going into another busy sale period.