UK retailers brace for surge in January returns frenzy

The first Monday in January, designated as 'National Returns Day,' is expected to see a significant increase in returned items. Evri forecasts that four million gifts will be sent back this month.

Throughout the year, approximately GBP £27 billion worth of products are returned to retailers in the UK, a trend that is gaining heightened attention from retailers. The process of returns and reverse logistics has become increasingly significant as retailers face the challenge of reintegrating returns into their inventory.

Gary Winter, Vice President of Global Strategic Initiatives at Quadient, highlights the consumer hesitations associated with in-store returns. "As we come face-to-face with the January blues, some people are dreading returning unwanted presents to the store even more than returning to work. Although the majority of retailers encourage people to make returns, many of us feel reluctant about taking unwanted presents to the store even to ask for an exchange, let alone a refund. For every unwanted present being returned to retailers, twice as many are being hung up in wardrobes and stuffed in drawers, never to be seen again."

He notes that modern retail environments have shifted to welcome returns as an opportunity for customer retention. "The days of cashiers casting judgemental looks at people returning presents are long gone, and retailers are eager to seize the opportunity to start a new customer relationship by accommodating returns and exchanges. However, some people feel uncomfortable taking presents back to stores in January, which is a lose-lose situation for everybody involved."

To address this discomfort, Winter suggests, "At this time, retailers need to make returns as simple and frictionless as possible. For instance, they can extend returns windows, or use Click & Collect areas and parcel lockers to minimise the need for returners to queue alongside January sales bargain-hunters. If retailers can make returns as quick and easy as possible, they will build loyalty in the long run."

Dean Standing, Chief Revenue Officer at Sagacity, advises retailers to use returns data to improve operations rather than view returns as a loss. "The sheer volume of returns can be overwhelming, but it's important retailers view them as more than a damage limitation exercise. They need to focus on the bigger picture—questioning why items are being sent back."

Standing explains that understanding the reasons behind returns can provide insights into product or service issues. "Naturally, at this time of year retailers will be receiving many returned Christmas presents, but in tandem, they will also be processing items from 'serial returners' – and dealing with the fallout from problems with products and descriptions. Rather than just processing these returns, they need to investigate what's going wrong."

He suggests, "Retailers should also connect the dots between customer information and return history, using data to understand how common returns actually are and which demographics are most likely to return."

"Using this intelligence, they can segment the customer base and set a more intelligent, nuanced returns strategy. Analysing the lifetime value of common customer groups, they can introduce charges to cut cost to serve and curb the damage serial returners are doing to the bottom line, while encouraging more spending from the most profitable customers over the longer term."