A recent study by Manhattan Associates has revealed that as cost-of-living pressures intensify and the post-End of Financial Year (EOFY) period concludes, return policies are becoming increasingly crucial for retail success. This study indicates that consumers are now more cautious with their purchases, making flexible and customer-friendly return options more essential than ever. The research found that 72% of respondents are more inclined to return products due to financial pressures, highlighting a shift towards more discerning purchasing behaviour.
"Consumers are more selective than ever," said Raghav Sibal, Managing Director for Australia and New Zealand at Manhattan Associates. "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."
One of the key findings of the study is that a store's return policy significantly influences consumer purchasing decisions. Specifically, over 69% of respondents indicated that a store's return policy affects their decision to purchase. Additionally, 40% of respondents will actively research a store's return policy before making a purchase. While many consumers have come to expect free returns, there is a notable shift in how they view and interact with return policies, showing a growing awareness and acceptance of changing policies.
With physical store foot traffic impacted by cost-of-living increases, rethinking return policies presents new opportunities for brick-and-mortar stores. The study revealed that 65% of consumers report higher satisfaction with in-store returns, suggesting that encouraging in-person returns could boost customer satisfaction and drive additional sales. Charging for online returns could incentivise customers to visit physical stores, potentially increasing in-store sales. Additionally, the rise of 'click and collect' services, preferred by 36% of consumers, enhances the shopping experience by merging online convenience with in-store interactions.
"The surge in retail returns offers businesses a unique opportunity to differentiate themselves by optimising their returns management processes," Sibal explained. "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 also highlighted the importance of a positive return experience in building customer loyalty. An overwhelming 91% of respondents indicated that a positive return experience makes them more likely to become long-term customers. Sibal addressed this by stating, "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, and the returns process itself can be a decisive factor in retaining customers and fostering long-term loyalty."
