While in-store purchases have decreased the store remains pivotal when it comes to returns, according to KPMG research.
In a survey of 1,600 KPMG employees providing feedback on 250 different retailers’ and brands’ services, the research showed that online shopping continues to be the most popular choice. 68% of respondents opted to login rather than take a stroll down the high street over the eight week period from November 2015 to January 2016.
Adding to the pressure on stores, the research revealed that 74% of customers did not physically test the product before purchasing.
James Tilley, supply chain director at KPMG in the UK said: “Consumers no longer seem to feel the need to go visit a store to ‘touch and feel’ a product before buying. This is partly due to better quality product information available on retailers’ websites, but also trust in user reviews or crowd sentiment which allows customers to feel more confident in making informed purchasing decisions without needing to physically test or try the product beforehand."
Additionally, 15% of respondents said they bought more than one of the same or equivalent product online for testing purposes with this increasing to 23% for fashion items. Tilley added, “With free delivery and a number of convenient return options available, consumers are essentially bringing the fitting room home. Many people are choosing to buy two or more equivalent items to compare and contrast for size, shape and feel before opting to return the one(s) that don’t suit.”
So if consumers are shopping on the high-street less and not physically testing products before choosing to buy, what does it mean for the role of the store?
KPMG’s research shows that the returns process potentially provides part of the answer. According to the survey one third of returns originally purchased online were actually taken back in-store. This means that not only are returns driving extra online purchases, they are also generating additional store traffic.
“Returns and the returns process are becoming increasingly significant as consumers take advantage of a number of free and convenient ways to take back purchases,” said Tilley. “In fact, just taking into account the flow of products into a warehouse, returns are essentially a retailers’ biggest supplier. And with more consumers choosing to visit shops to return items this offers retailers the chance to use the theatre of the store to entice impulse spending.”
However, there is a potentially high cost associated with processing returns regardless of whether they are received in store or in the post, as items need to be reviewed and assessed for faults or damage, repackaged and then distributed to a location where they can be resold. With so many touch points within the reverse supply chain, returning an item using a parcel carrier or postal service can mean an average wait time of 10 days in order for the money to be credited back to the consumer. In fact, nearly 15% of survey respondents returning items waited more than two weeks to be credited with their refund. This compares to in-store returns which take under two days to process.
“Regardless of where items are taken back there remains a stubborn lag in the time it takes stock to make its way to virtual or physical aisles ready to be resold,” according to Tilley. “As well as being frustrating for the customer, this could mean many items pass their prime, so by the time they are available for re-sale the season has passed and they end up on the discount rail.
”While customers returning products in-store offer upsell opportunities for retailers, the product still needs to navigate a similarly complex reverse supply chain process, back through the warehouse and out again before it is ready to be resold.
Tilley concluded: “What’s really key is the reliability of stock information. If retailers can get returns from the till to the shelf, rather than taking a roundabout route via the warehouse, they will be leaders of the pack.”
KPMG’s Omnichannel Retail Survey 2016 can be accessed here.
Notes to editors
KPMG’s Omnichannel Retail Survey 2016 used an online survey tool to collect data from 1,600 KPMG UK employees over an 8 week period from November 2015 to January 2016. The survey covered 250 unique retailers and brand organisations across 30 categories including men’s clothing, women’s clothing, homewares, electronics, children’s toys, food and non-alcoholic drinks, CDs, DVDs and books, beauty.
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