Innovative framework helps companies prevent returns, boost profitability and satisfy shoppers
Incisiv and Newmine launched The Retail Returns Prevention Playbook, which addresses retail’s urgent need to minimize returns to improve top-line growth and customer satisfaction. The industry lost $761 billion of revenue to returns in 2021, representing 17% of retail trade. Although 2021 retail trade grew 14% year-over-year, returns rose by a staggering 78%. Now this playbook delivers a practical framework, as returns reduction is a timely, necessary and achievable opportunity retailers and brands can no longer ignore.
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Returns prevention is a growing strategic priority for retailers looking to enhance their business performance due to the shift to digital, importance of sustainability and rising cost of customer acquisition. Prompt action is necessary to keep companies competitive because returns prevention can protect revenue, improve profitability and enhance the customer experience.
Product returns have surged during the pandemic. “The status quo of retail returns is already untenable,” said Navjit Bhasin, Founder & CEO, Newmine. “Fortunately, 73% of returns are controllable, so applying preventative best practices can give retailers and brands an edge.”
Despite a clear business case for returns, “retailers aren’t taking action because they do not know how or where to start with returns prevention,” explained Giri Agarwal, Chief Strategy Officer, Incisiv. “Surprisingly, 70% of retailers do not have a good understanding of the root cause of their returns. Our playbook gives companies specific next steps to protect their top line and fuel future growth.”
The biggest hurdles retailers face are the multi-functional footprint of returns and lack of executive ownership. In response, Incisiv and Newmine’s playbook offers a holistic framework for returns prevention to make it easier and faster for executives to start solving this costly, complex issue.
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Also, returns prevention pays off. For instance, a large specialty retailer with $10 billion in annual revenue and a best-in-class blended return rate of 10% would add $109 million to its top line by reducing its controllable returns by just 15%. With a similar reduction, a mid-size apparel retailer with $500 million in annual revenue and an industry average blended return rate of 35% would add $19 million to its top line. Each retailer would also realize significant gains in profitability, sustainability, customer experience and brand value.
Current market factors that deepen the urgency for retailers to prevent returns include rising inflation, competition, omnichannel expenses and supply chain disruption. These factors erode profitability, and force retailers and brands to find new ways to improve business performance, including minimizing returns. In addition, product returns create a significant carbon footprint. Now retail sustainability is going beyond corporate responsibility, and increasingly being tied to enterprise value by environmental, social and governance (ESG) investors.
