Tag: returns

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AI ESG Retail trends

3 Retail Trends You Cannot Ignore in 2024

Paid partnership with Manhattan Associates

After years of volatility and disruption, might 2024 bring some much-needed stability?

I’m optimistic that we are safely out of ‘permacrisis’ mode, but that doesn’t mean that 2024 will be uneventful. Technology will continue to disrupt the status quo, improving operational efficiencies and taking the customer experience to new heights. Here are 3 areas to watch:

AI: From Intrigue to Implementation

The buzz and excitement of generative AI bursting into the mainstream dominated the headlines in 2023, with ChatGPT alone reaching 100 million users within just a couple of months. But things will really begin to heat up in 2024: this will be the year of deployment. AI is no longer hype; it’s reality. We are on the cusp of another ‘smartphone moment’ where AI will disrupt every aspect of the value chain – from product development right through to consumption.

From a customer experience perspective, the holy grail of hyper-personalisation is finally within reach. AI-powered shopping assistants are not the future, they are here now. Rich, real-time, relevant experiences are rapidly becoming the norm. I’m personally excited to see how AI develops in our kitchens, helping consumers not only with meal inspiration but also reducing food waste, and also how AI-enabled virtual try-ons might help tackle the perennial problem of returns.

Tech-Enabled Human Touch

As retailers recognised the value in repurposed, tech-infused stores, the collective view on bricks and mortar shifted from ‘liability in a digital era’ to ‘top asset’. The industry’s primary goal of the past decade has been digitising our physical spaces. As we look ahead to the next decade, the focus will shift to making our digital spaces more physical, more immersive, more lifelike. We’re already seeing this with the rise of virtual try-ons, liveshopping, social commerce and virtual shopping consultations, to name a few. Mixed reality is coming. In the future, we really won’t know where the physical world ends and the digital one begins.

As e-commerce transitions from its current static, transactional state to one of multiple dimensions, physical retailers will need to ensure they are leveraging their staff to provide a unique, elevated experience. Retailers must look to technology here to help democratise concierge-level service, allowing staff to serve the customer in both an efficient and highly personalised way – that’s everything from clienteling to allowing customers to pay on the spot or swiftly collecting or returning an online order. Tech-enabled human touch will differentiate the winners from the losers in 2024.

ESG: Firmly Back on the Agenda

In recent years, progress on the ESG agenda may have been quietly stunted as both retailers and consumers prioritised cost efficiencies. However, it’s safe to say that this is one trend that is never going away, and I believe sustainability will be a top priority for retailers in 2024 and beyond.

Transparency will be a key theme this year. Consumers look to retailers to guide them in their decision-making and, with heightened awareness around both greenwashing and bluewashing, there is simply no hiding behind false claims or labels. Retailers will be judged on their authenticity. They should be striving for honesty over perfection. Retailers must have full visibility over their supply chain and be able to effectively communicate their practices and standards to consumers. I believe we’ll see greater demand for product durability and traceability around retailers’ broader circularity efforts. Increasingly, shoppers will want to align with brands whose values reflect their own.

 

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Fulfilment Technology

Give Customers Greater Control Post-Purchase, Argues Manhattan Associates

Paid partnership with Manhattan Associates

The most successful consumer-facing businesses today are those that uncover their customers’ needs first and then work backwards to provide the right experience. In theory, customer experience should have always been at the heart of retailers’ strategies from day one. After all, the whole point of retail is to serve the customer. But, let’s face it, for a long time, retailers were able to dictate the terms.

As Eddie Capel, CEO of Manhattan Associates, told me at the Manhattan Exchange in Berlin last month: “We got used to a no culture. Do you have my size? No. When might it be back in stock? Dunno. There was a lot of no in retail for a long time. Retail has turned into a ‘yes culture’.”

But what sparked that change? I was intrigued to hear his thoughts because this formed the very foundation of my and Miya Knights’ Amazon book, so I naturally had a few ideas of my own on the topic.

Eddie Capel, CEO of Manhattan Associates, says the retail industry has shifted to a ‘yes culture’

“Retailers did not have to worry about loyalty, but that has changed immensely now. Creating a ‘yes culture’ has become key, and Amazon and others have pushed retailers on service and delivery promises. Technology is helping to keep those promises,” Capel added.

I couldn’t agree more. As customers today, our tolerance for mediocrity is pretty low. We expect to shop on our terms. We no longer accept bland, vanilla retail experiences. Instead, we want the red carpet rolled out for us. We want a white-glove experience. We want to be wowed, surprised and delighted.

Retailers have made significant progress in blending the physical and digital worlds, but there is still more to do. In the whitepaper that I authored for Manhattan Associates, we found that just 6% of retailers that we surveyed have an accurate view of their inventory across their entire business 100% of the time. I have to admit, that figure shocked me given that we are living in this on-demand era where customers are hyper-informed and, in Capel’s words, retailers need to be “promise keepers”. How seamless of an experience can you offer if you don’t consistently know where your stock is?

Another area where I see room for improvement – and this was reaffirmed by the report – is returns. Even today, the post-purchase experience is often neglected. For example, only around half of retailers we spoke to allow customers to buy online and return in-store (46%) or buy in-store and return online (50%). 

Enabling this level of flexibility and cohesion will enhance the experience for the customer, but more needs to be done to stamp out returns from happening in the first place. The industry needs to collectively address its perennial problem. In recent years, retailers themselves have exacerbated this problem in an attempt to appease the customer – offering free returns and encouraging a buy-to-try mentality.

There is some progress being made, for example around sizing/fit among fashion retailers. Some have even gone to the extreme of charging for returns, very much uncharted territory for a sector where over one-third of purchases are returned. And let’s not forget, as counter intuitive as it may seem, those big returners are often a retailer’s most valuable customers.  

But it’s better for all parties to get it right in the first instance. Looking across the wider retail industry, another way to reduce the rate of returns is by giving customers greater control over fulfilment. As things currently stand, all control is lost once the customer places an order. If they want to change their delivery or edit their basket, it’s simply too late. It then becomes a return.

Giving customers more control post-purchase doesn’t just translate to a better customer experience – which ultimately drives greater loyalty – but it also has both economic and environmental benefits. Brian Kinsella, SVP, Product Management argues that customers should be granted a window in which they could change their mind on fulfilment method, for example switching from home delivery to click & collect and vice versa. Kinsella even believes that shoppers should be able to cancel an online order. Why? To drive down returns, or what he calls “unnecessary shipments”.

In Berlin, Kinsella also called out the importance of communication post-purchase. More retailers, for example, should be utilising real-time messaging with home delivery, again to simultaneously improve the experience for the customer while ensuring someone is in to receive the delivery.

Historically, retailers may have begrudged looking beyond immediate customer needs, but today it’s imperative that retailers proactively address pain points. They need to be continuously re-evaluating the customer journey, identifying and removing any new points of friction and ensuring that they are going above and beyond. The risk of inaction is simply too great.

Categories
E-commerce Fulfilment

Rethinking Returns 2021

Online store selling clothes on website working on laptop ecommerce business from home. Woman packing new clothing fashion purchase in shipping packages for delivery. Panoramic banner.

Let’s talk returns. The industry’s perennial problem has been exacerbated by the pandemic and retailers can no longer afford to avoid the post-purchase experience. In this latest report with Klarna, Rethinking Returns: From Returns to Retention, we explore the power of returns as a customer acquisition and retention tool, and the repercussions of getting them wrong. 

Based on a survey of over 2,000 UK consumers, our research found that over eight in ten (84%) online shoppers would turn their back on a retailer after a bad returns experience.  

With 39% of consumers* having done more shopping online since the pandemic, an increased reliance on returns means people’s patience is waning when it comes to clunky or costly returns processes. 83% of online shoppers** admit to getting frustrated by retailers which have an inefficient returns process, while 82% agree that retailers in general need to improve their returns capabilities.

Demonstrating the need for retailers to keep up with consumers’ changing needs, some of Brits’ biggest frustrations with returns stem from the inconvenience of slow, out of date or inflexible returns processes. Over a third (36%)** cited slow refund processes as the most frustrating element of returning items bought online, highlighting the importance of flexible payment options. Other frustrations include having to print off return forms when they don’t have a printer (25%), the inconvenience of queuing to return at the post office (23%) and not being able to return items in store that they’ve bought online (21%).

Exacerbated by COVID, these frustrations with the returns process are the driving force behind emerging shopping trends, as people find ways to avoid inconveniences. Over the past 12 months, a fifth (21%) of online shoppers say they have reluctantly kept an item they were unhappy with because it was too much effort to return it, 12% have avoided returning items at the post office because it’s difficult to social distance, while 11% have gifted and 9% have resold items they don’t want instead of returning to the retailer. In the long run, this could mean people avoid buying again from retailers that don’t meet their needs.

For those retailers that get returns right, this can serve as a competitive advantage, helping to attract new customers, and boost customer loyalty. 84% of online shoppers agree they’re more likely to buy from and 86% are more likely to come back to online merchants who offer free returns. However, even a little added inconvenience can come at a cost: over two thirds (70%) of online shoppers state that if a preferred retailer stopped offering free returns, they might not shop with them.

Alex Marsh, Head of Klarna UK, said: “Nobody wants to be out of pocket as a result of items they don’t even choose to keep, so it’s no surprise that slow refund processes are the top frustration factor when it comes to returns. As reliance on returns grows, retailers need to ensure they’re offering a smooth, seamless process that meets the needs of today’s customers – considering everything from effortless logistics to flexible payment options. As our research suggests, those that fail to adapt will lose customers in the long term.”

The research also uncovers a consistent trend of rising consumer expectations when it comes to returns services. Compared to 2019, a greater number of online shoppers now believe that returns are a normal part of online shopping today (80%, up from 77%) and expect that every retailer they shop with offers free returns as a minimum standard of service (81%, up from 75%). And, as customers increasingly demand free and easy returns, more consumers also now state they’d never shop with a retailer that didn’t offer free returns (57%, up from 53%), and that all their preferred retailers offer free and easy returns (73% up from 70%).

Natalie Berg, Retail Analyst and Founder of NBK Retail:

“Consumers often expect a returns policy to mirror that of delivery – fast, frictionless and free – but that’s not always the case. The pandemic has thrust the issue of returns into the spotlight, exacerbating the disconnect between the effortlessness of placing an online order and the inconsistent and often friction-filled experience of making a return. Returns are fantastically out of sync with an otherwise seamless e-commerce experience.

“As we reimagine retail for a post-COVID world, retailers must accept that returns are part and parcel of 21st century shopping and, if managed well, can encourage conversion and drive loyalty among their most valuable shoppers. Retailers can no longer afford to ignore the post-purchase experience.”

You can download the full report here.

NOTES:

* consumers that shop online

** consumers that shop online and return items

 

Categories
Retail trends Store of the future Technology

Mindful Consumption, Peak Amazon and the Participation Decade – 8 Retail Predictions for 2020

Natalie Berg NBK Retail 2020 trends

What’s in store for the retail sector in 2020? First, let’s be clear about what’s not changing. We’ll continue to see a bifurcation of winners and losers as the industry sheds itself of status quo retailers (translation: brace yourself for more doom and gloom). The ubiquitously connected ‘on-my-terms’ shopper is here to stay. We’ll see a continuation of the convergence of physical and digital retail. The race to stamp out friction and inefficiencies will only accelerate, and reinvention of the physical store will remain top of the boardroom agenda.

Now the fun stuff. In my latest piece for Forbes, I’ve highlighted 8 retail predictions for 2020. You can read more here.

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E-commerce Fulfilment Store of the future Technology

Great customer experiences can only be delivered with top-notch operations

The final whitepaper in our series with Red Ant explores how bricks & mortar stores must evolve to become genuine hubs for fulfilment. 

The most successful retailers today are those that view their stores as assets not liabilities. As contradictory as it may sound, they understand that the key to growing e-commerce sales is leveraging their physical infrastructure.

These retailers also recognise that traditional metrics for success are no longer valid in today’s omnichannel world; the future of retail isn’t solely online or in-store but a blend of both channels. A OnePoll survey shows that nearly 40% of shoppers use online and store channels equally.

So, the store estate is actually an asset, but problems arise if they are not fit for their new purpose. As 20% of UK retail sales now take place online, less physical shelf space is required. Instead retailers need to dedicate more space on the shop floor to fulfilment services.

Store fulfilment plus points

When asked what types of experiences they would like when in store, the top three answers from shoppers all related to fulfilment:

  • 48% want simple returns of online purchases
  • 42% want click & collect
  • 35% want to be able to order online while in store when items are out of stock

There’s no denying that the rise in online shopping has come at the expense of physical retail sales, but we can’t overlook the many opportunities it has also created for those retailers willing to evolve.

One of the main draws of click & collect is the ability for customers to ensure product availability before heading in-store, as 40% of shoppers surveyed say that knowing what you want is in stock is a factor in choosing one retailer over another.

Over half (51%) cite not having to wait for deliveries as a reason to shop in store versus online. Customers coming home to the dreaded “sorry we missed you” note adds a lot of friction to an experience that is intended to be anything but.

Holistic customer experience

Click & collect is, therefore, a no-brainer for retailers, and many have been quick to recognise that in-store collection and returns can improve footfall and consequently incremental spend. Countless studies have shown that shoppers often purchase something else once in store and herein lies the opportunity: retailers must engage with shoppers at the point of collection in a bid to cross-sell or upsell based on the items that have been reserved.

Making the most of this, however, depends on equipping store associates with the right technology. The aim should be to establish staff as trusted shopping companions rather than simply someone who gives the customer their order and ticks it off on a list.

The data is there, but retailers need to connect the dots to offer that holistic customer experience.

Download Store of the Future: The Store as a Fulfillment Hub now to get the full picture and read more of Natalie Berg’s expert insights.

Categories
E-commerce Fulfilment Store of the future

Next gets that the future of e-commerce is stores

To be relevant in retail today, you have to acknowledge that stores are no longer purely about selling. I believe most high street retailers are on board with this concept, but few are comfortable implementing it. And that’s because for decades, we as an industry have obsessed over metrics such as like-for-like sales growth whereby success is confined to a shop’s four walls. But it’s 2019 and we all know that’s not reflective of actual consumer behaviour.

Next is one of the retailers that gets it. They have hundreds of stores with a presence on most high streets – yet the bulk of their sales take place online. They’ve accepted that stores are never going be as productive as they were before the advent of e-commerce, and while there is certainly a need to redress the balance through select closures there is an opportunity to redefine the very purpose of bricks & mortar stores. 

Next understands that, as contradictory as it might sound, shops now play a critical role in growing online sales. If you don’t believe me, just look at the tsunami of online retailers now opening physical stores. Having a bricks & mortar presence means online retailers can offer shoppers additional choice in fulfilment while reducing customer acquisition costs, generating that elusive halo effect.

Customers want to shop on their terms, they want the best of both physical and digital worlds. They want to marry the ease of buying online with the convenience of collecting or returning items instore. It’s no surprise that half of Next’s online orders are collected instore, while stores also process over 80% of e-commerce returns.

Another example of online and offline working in harmony at Next is through same-day click & collect. Shoppers can now view and reserve local store inventory for collection in under one hour. This might not be a gamechanger (I can’t imagine many Next orders are that time-sensitive) but it shows how retailers can leverage their stores in a digital era.

Lastly, Next is rethinking the role of its stores by doing something most wouldn’t dream of – teaming up with Amazon. Six months ago, Next became Amazon’s UK partner for its launch of Counter, a service that lets shoppers collect their Amazon parcels from staffed pick-up points in Next stores. Again, this is about the following the customer: according to Mintel, 90% of UK shoppers use Amazon and I would estimate that Amazon accounts for just under half of e-commerce sales in the UK. The partnership is a win-in. No one can do fast delivery like Amazon, but often it’s predictability over speed that consumers are after and this is where stores come in. Meanwhile, Next benefits from the additional footfall and opportunity for incremental spend.

Retailers can take inspiration from Next’s strategy, understanding that stores are an essential component to facilitating e-commerce sales. We have to stop treating e-commerce as the death knell for the high street. We have to ditch those metrics that pigeonhole retailers and start valuing our stores based on their ability to enable digital purchases.

This article originally appeared on Retail Week.