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RETAIL ENVIRONMENT

The DC makes its own journey as part of the overall customer experience

Dan Hardy - Amberstone’s Managing Director - ponders peak returns to DCs

 

Distribution and fulfilment centres are seeing significant levels of investment, often at the expense of their high street colleagues, a trend that has been accelerated by COVID-19.

However, one area that seems to almost be overlooked by some retailers is returns, despite some experiencing volumes equal to 50 per cent of total sales. These items have to be received, checked, repackaged and put back into stock, a perennial headache during and post peak.

The pandemic has added the further complexity of potential quarantining, thereby delaying customer credits and creating customer frustration.

How will such a large variety of items be adequately checked and how do you keep a track of each item so that it does not create shrink?

Stock control is a major consideration in the provision of an excellent customer journey. Without it, all other systems fall apart. 

Stock quarantining has become a big issue, especially for the fashion industry. Across Europe there are significant variances in how long stock should be quarantined after a customer has returned it.  In many stores, customers are dissuaded from handling stock unnecessarily, including the all-important trying on of garments. Instead they make their purchases and then try on at home. If a refund is required, the clothes may be returned to store or equally via the DC.

For many stores it is impractical for that returned clothing to be quarantined, so they are returning tried on items to the DC for quarantine, checking and repacking.

Consideration must be given to how this increased volume of packages is received and recorded. Some retailers unpack on receipt. Others hold the whole lot in a quarantine area for 72 hours before their staff go near it, potentially resulting in millions of pounds worth of identified goods languishing in a quarantine area with perhaps little or no understanding of the stock profile or value which has to be bad news from an asset protection perspective.

Returned stock is also increasingly housed in temporary buildings, increasing security risks in terms of potentially being a soft target for organised crime. How are goods booked in and out of these temporary stores?  How are they secured as a valuable asset to the business?  Are security measures as robust as purpose-built bricks and mortar?

Apart from anything else retailers can expect to receive more damaged items that need to be rejected, either to the manufacturer or the customer depending on when the damage occurred. And with more stock in one place, the possibility of a big loss to the business from a major incident increases too.

As online has expanded the range of products offered has expanded too. This means that in many cases staff will not be familiar with what a product should or should not be like. 

And even if you are able to identify that the correct goods have been returned by the customer, how do you then go about testing them? This could be deciding if the dress had been worn through to complex electronic products that need to be checked before going back into stock. Remember that restocking a damaged product is a double whammy. Not only have you got the cost of restocking, but you have also inevitably built in the cost of having to do so twice when it gets returned the second time.  There is the issue of now disappointing two customers. If you have a system that builds disappointment into the process, you are not going to be well thought of by your customers!

When the wrong item is delivered, a substitute rejected or perhaps the customer does not like the item and elects to send it back, those returns have to be processed, checked and booked back into stock, which along with the aforementioned quarantine issues can compound an already imperfect customer experience.

The consequences could be that the customer paying by credit card may well have to part with cash they did not expect to have to spend because the refund crosses an end of month calculation with the credit card company. More hassle from the customer’s point of view and pretty soon they are telling everyone on social media that you have had their money for too long. So a real issue is process time and refund speed to avoid damaged reputation.

So if your refunds are delayed because of the processes you have to operate, consider making sure that the customer is well informed even if only to say, “we’ve received your goods and will be unpacking and confirming your refund in the next few days.” Not as good as “the money is in your account”, but better than long days of stony silence!

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