As retailers prepare for the end-of-year holiday season, one challenge looms large: the post-holiday returns frenzy.
Following a spike in returns in 2023, with one in three US adults returning or exchanging gifts, retailers are bracing for a similar scenario in 2024.
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However, Shaun Britton, VP of Europe, the Middle East and Africa (EMEA) at retail software company Jumpmind, sees this challenge as an opportunity for retailers to drive revenue, enhance customer loyalty, and tackle returns fraud.
“Customers want a fast, frictionless returns experience. Around the holidays, you may be receiving returns from customers who aren’t regular customers of your store but received a gift,” says Britton.
“The returns experience make or break their perception of you as a retailer.”
By improving the ‘reverse checkout’ experience, Britton believes retailers can turn what might be a negative interaction into a loyalty-building moment.
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By GlobalDataEnhancing the reverse checkout experience
With more consumers making returns post-holiday, especially for online orders, Britton emphasises the importance of making the experience simple, fast, and rewarding.
Research by RSR, sponsored by Jumpmind, shows that while 61% of retailers view returns as an opportunity to upsell or cross-sell, 43% of consumers simply return the item and leave. This disconnect means that retailers need to work harder to engage customers before they reach the register.
Britton suggests that empowering store associates with mobile technology can play a crucial role in capturing customer attention before the return is processed.
Retailers must engage customers before they get to the point where they are at the register making a return, where it is typically too late. This is only possible if associates are “empowered with the technology to help them on the store floor”, he explains.
“An associate could greet a customer at the entrance and offer to help them find an alternative item, while scanning their receipt and accessing their transaction via a mobile device.”
The use of mobile technology allows associates to suggest products based on the customer’s purchase history, creating potential upsell opportunities.
Retailers can also introduce incentives such as price protection or store credit.
“Another reason customers return items is that they go on sale after they made their purchase. Retailers can combat this by offering price protection and store credit for the difference in price if customers bring in their receipt to be scanned,” says Britton.
This strategy could help alleviate the common frustration of post-purchase price drops, building goodwill with customers.
Upselling and cross-selling: engaging customers during returns
While many retailers hope to capitalise on foot traffic from returns, Britton argues that simply accepting returns is not enough.
Retailers must create opportunities for additional purchases by enhancing the store experience.
One way to achieve this is by redesigning the layout of physical stores.
“Allowing customers to handle returns at the cash register instead of at a ‘customer service desk’ located right by the exit, can ensure they are exposed to merchandise in the store before they walk out,” Britton notes.
He suggests placing “last-minute” purchase items in the checkout queue as a way to inspire spontaneous purchases from customers already planning to return something.
To further incentivise in-store shopping, Britton advises retailers to create compelling promotions around the holiday season.
“Offering compelling promotions and in-store experiences around the holiday season can also lure shoppers to walk around the store instead of heading straight to the cash register,” he says.
Enhancing the in-store experience for online returns
One of the largest challenges retailers face is managing the return of online orders in physical stores.
According to Britton, making this process smooth and seamless is key to retaining customers and driving sales.
Britton stresses that retailers should focus on three key areas to make the experience more engaging: ease, exchanges, and personalised service.
“First, it needs to be as easy as possible because customers dread a clunky, cumbersome returns process,” he emphasises.
“They shouldn’t need to wait in a long queue at a returns-specific checkout terminal when cashiers are open in other checkout lanes. If they purchased something online, they should be able to return it without a shipping label or shipping packaging.
“Second, retailers should enable an exchange instead of a return, where possible,” he says, highlighting the value of allowing customers to swap sizes or colours without hassle. This not only simplifies the process but also helps maintain pricing and promotional consistency.
Additionally, associates should be equipped with tools to access customer data at any point in the store, whether via a mobile device, the cash register, or even the entrance.
Reducing fraud while enhancing customer experience
Returns fraud is a growing concern for retailers, with fraudulent returns in the UK alone increasing by 13.7% in 2023.
However, retailers must balance the need to combat fraud with providing a seamless return experience for honest customers.
“Minimising returns fraud presents a significant opportunity for retailers to avoid losses around shipping and administrative costs, as well as associate time,” Britton cautions.
Britton advocates for retailers to ensure all transaction data is connected and stored online.
“Then, when you scan the receipt, you have initiated a secure return. If your store is offline, you are going down the path of an unsafe return that won’t be recorded in the cloud. It’s essentially the same thing as accepting a return without a receipt,” he explains.
By connecting transactions in the cloud, retailers can prevent fraudulent activity and offer customers the convenience of email receipts, making returns easier even if the physical receipt is lost.
A clear and accessible returns policy is another key tool in fighting fraud.
Britton recommends making sure that customers know the policy before they make a purchase.
“Having the return policy prominently displayed at checkout can ensure customers’ expectations align with the store’s procedures,” he advises.
“Retailers should ensure that return policies are clearly stated and accessible,” he advises.
“Having this policy prominently displayed at checkout can ensure customer expectations align with reality.”
The role of technology in streamlining returns
Technological solutions play a critical role in both reducing fraud and improving operational efficiency.
For instance, Britton points to Jumpmind’s work with Petco, where the retailer saved millions by overhauling its returns management system.
Retailers can also use technology to speed up returns and improve the customer experience.
Britton suggests automating aspects of the returns process such as dispatching associates to retrieve replacement items while a customer waits at the register.
“Technology should be a tool that improves the customer experience while minimising the chance of fraud,” he says.
“When transactions are connected in a unified system and updated in real-time, it’s easier for retailers to recognise fraudulent patterns and prioritise protecting themselves against significant returns fraud without burdening compliant customers with cumbersome returns processes.”
Looking ahead, Britton foresees retailers adopting self-service kiosks and drop boxes to further streamline the returns process.
“With the proliferation of RFID [radio-frequency identification], there are even more opportunities to speed up returns for a better customer experience, while prioritising loss prevention,” he predicts.
As the 2024 holiday period approaches, retailers must prepare for another holiday return surge.
However, with the right strategies and technology in place, they can turn this potential headache into an opportunity.
By improving the reverse checkout experience, engaging customers during returns, and leveraging technology to reduce fraud, retailers can not only protect their bottom line but also build lasting loyalty.
