Study shows return policies crucial for Australian retailers

In light of the increasing cost-of-living pressures in Australia, a recent study by Manhattan Associates has revealed that flexible and customer-friendly return policies are becoming crucial for retail success. The research highlights that Australian consumers are more cautious with their spending and more likely to return items, making return policies a significant factor in their purchasing decisions.

The study, which surveyed 500 Australian consumers, found that 72% of respondents are now more inclined to return products due to financial pressures, indicating a shift towards more discerning purchasing behaviour. Raghav Sibal, Managing Director for Australia and New Zealand at Manhattan Associates, commented, "Australian consumers are more selective than ever. With tighter budgets and the financial reassessment following the EOFY, they are less inclined to keep items that do not meet their expectations, making a retailer's return policy a critical factor in their purchasing decisions."

The report also found that a store's return policy significantly influences consumer purchasing decisions. Over 69% of respondents indicated that a store's return policy influences their decision to purchase. Moreover, 40% of respondents actively research a store's return policy before making a purchase. While many consumers have become conditioned to expect free returns, there is a notable shift in how they view and interact with return policies, reflecting an unspoken awareness and acceptance of changing policies.

In-store returns were highlighted as a key opportunity for brick-and-mortar stores. With physical store foot traffic impacted by cost-of-living increases, rethinking return policies presents new opportunities. A notable 65% of consumers reported higher satisfaction with in-store returns, suggesting that encouraging in-person returns can not only boost customer satisfaction but also drive additional sales. Charging for online returns could potentially incentivise customers to visit physical stores, thereby increasing in-store sales. The study also pointed out that 'click and collect' services, preferred by 36% of consumers, enhance the shopping experience by merging online convenience with in-store interactions and sales opportunities.

"The surge in retail returns offers businesses a unique opportunity to differentiate themselves by optimising their returns management processes," explained Sibal. "With the right technology, businesses can drive shoppers back to the store, deliver impactful customer experiences, and offer enhanced transparency throughout the entire returns process. Taking advantage of this opportunity by offering seamless experiences across channels enables brands to set themselves apart from competitors and build a competitive edge."

The study concluded with findings on the importance of positive return experiences for building customer loyalty. A positive return experience was deemed pivotal for customer loyalty, with 91% of respondents indicating it makes them more likely to become long-term customers. Sibal elaborated, "Returns are becoming increasingly frequent in today's omnichannel retail landscape. Customers are leveraging the convenience of purchasing from anywhere at any time, which leaves many retailers facing the challenges of managing returns effectively. Implementing robust returns management technology is crucial for two key reasons: returns can significantly impact retail operations' costs, but these costs can be mitigated by encouraging in-store returns, where there's a chance to salvage some portion of the sale. The returns process itself can be a decisive factor in retaining customers and fostering long-term loyalty."