By Kelly Jones / www.tsbsupplychain.com / May 8th, 2015
I sat down with ReBOUND’s Business Development Director Belle Shergill to pick her brains for insight on how to manage the busy periods. With a strong ops background, Belle has a wealth of experience managing logistics services as a supplier for online retailers and continues to work closely with leading brands.
What seasonal peaks will retailers be worried about?
Before chatting with Belle, I used to think of Christmas as the only seasonal shopping peak, but it turns out there’s a lot more going on behind the scenes. Besides the smaller holidays we acknowledge in the UK like Valentines, Mother’s/Father’s Day and Halloween, when you’re selling cross-border there are seasonal peaks from all over the world which crop up too. In recent years we’ve seen the American born-and-bred discount days such as Black Friday and Cyber Monday surge in the UK too and so we’re shopping like we have never shopped before! But despite these additional seasonal challenges, studies show that only 28% of retailers take international peak trading into their forecasting*.
I was surprised to hear from Belle that “Easter is just as big as Christmas for most fashion retailers” and further digging confirmed that retailers drive a big push during Eastertime, with 16% admitting that this period is in fact their biggest seasonal peak during the year*. From a consumer perspective, I suppose Christmas is more about treating others with gifts, but in the approach to summer, we treat ourselves to a new summer wardrobe. Belle adds “you’ve got all the bank holiday paydays and the kick-start into summer mode to think about”. On the retailer side of the fence, “looking back at the Easter experience as an example – everyone was flat-out because all they are concerned about is doing all the promotion for the big bank holiday weekend. So whenever there’s a bank holiday, they’ll be doing a really big push on selling their products. After that activity happens, they’re left with high volumes being dispatched which is great, but then it’s dealing with the high volume of returns coming back in too, which is less glamorous”.
What sort of return patterns do we see?
We see seasonal peaks, but we also see seasonal lulls. It looks like there has been a lingering effect following the Christmas period as sales figures actually slumped in Q1 of 2015, down 10% from the previous year**. We witnessed the calm before the storm as retailers reported a fall in sales just before Black Friday, as they believed shoppers were holding back on Christmas shopping until Black Friday due to the media hype surrounding the event last year. Then there were the Black Friday Hunger Games (you can read more about this here) followed by the spending spree hangover phase where consumers felt the pinch from binge buying. This cultural shift towards flash sales means that consumer spending is concentrated into tighter windows and such is the nature of impulse buying that it means there’s increased chances of consumer regret – resulting in higher return rates than normal.
According to the National Retail Federation, the rate of returns for purchases made over the holiday season equals approximately 8.1% of total retail sales annually***. Not only does this mean that retailers have to deal with this huge influx of items being returned to brick-and-mortar stores during peak buying seasons when it is already busy in store, but there is also the added pressure of handling the growing number of internet buys and ensuring they are processed in a timely manner.
To put this into perspective, 40-60% of total returned volumes across the year are returned during seasonal peaks***. Therefore, it is essential that there is a slick returns process in place which allows for items to be restocked efficiently as this can maximise the recovery rate of the businesses inventory. One way to minimise the influx of returns in retail is by extending your returns policy as a goodwill gesture during seasonal peaks. This is not uncommon now, but I’ve still not seen any retailers making allowances for Easter in their policies, so maybe we’ll start to see this in the coming years as retailers channel more energy into their returns policies. You can read our 10 top tips for a winning returns policy here.
So when should you start planning for the Christmas peak?
“From my experience, retailers go into this mental block from September/October as the big challenge that retailers have is with IT shutting down for the big code freeze for new implementations, new service launches etc. September is the deadline for planning how you’re going to cope with seasonal peaks as there’s no way anyone would touch their servers in November. By then it’s too late anyway as you’re just reacting to returns rather than planning how to make the process smoother from a logistics angle, and easier for your customers too”, Belle tells me.
It may be surprising to hear that many of the retail giants would have started to plan for next Christmas while you were still finishing up your turkey leftovers! The key is to start early; planning is at the heart of any effective strategy for seasonal peaks, so the earlier you start, the better. To be able to respond to sudden surges of consumer demand is critical to the brand reputation and maintaining consumer loyalty. For one-off promotions and flash sales, the percentage of first-time buyers will drastically increase, so it is critical to ensure their first return experience with your brand is positive. 80% of first-time buyers will never shop with you again if they need to return their purchase, even if the returns process is seamless****. So by taking steps to improve visibility of the returns process and enhance the consumer returns experience by refunding them quicker can all help to re-instate their confidence in shopping with you again.
Belle concludes that “because retailers have felt the pain of the last year or so, they’d normally just ignore that pain and focus on other outbound projects. But the good thing is that there are solutions out there now to manage returns and we’re getting to a point now as we take a 360 degree turn where returns are actually going to be on top of everyone’s agenda”.
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