Inflation, rising expectations, and delivery demands – The perfect retail storm

UK inflation has risen above 10% for the first time in 40 years – and this trend is set to continue. With this, consumers will be forced to make some tough decisions as they manage the effects of the cost-of-living crisis.

Inflation, rising expectations, and delivery demands

UK inflation has risen above 10% for the first time in 40 years – and this trend is set to continue. With this, consumers will be forced to make some tough decisions as they manage the effects of the cost-of-living crisis. This has created the perfect retail storm. Brands are now battling for both share of customer mind and wallet. According to our recent industry survey, 63% of consumers admit to spending less in shops and online than a year ago, and 82% report they are more money-conscious now due to inflation. 

As such, consumers are more conscious about how and where they spend their money, and they’ll also be expecting more for their buck. Customer loyalty is going to be fragile, and one bad delivery experience will likely send a shopper straight to your competitor. In fact, our recent research revealed that 63% say a poor delivery experience would stop them purchasing from a brand again. There is no room for error in a market this competitive, especially when – if one brand is getting their delivery experiences right – customers can be so easily swayed.

That’s why retailers need to be showcasing exceptional offerings in the form of proactive communications, and easy delivery and returns processes. 

Why mastering your returns process matters

Data shows return rates are growing, with latest figures showing a 24% increase since Christmas, compared to previous years. In the UK, reports show that the ‘reverse logistics’ of returns is costing retailers £60 billion a year. 

However, returns don’t just represent revenue losses for retailers. They also have an impact on warehouse capacity and of course on customers’ brand loyalty and satisfaction. 

44% of consumers would not re-order from an online retailer if they had experienced issues with their return process. This comes as no surprise, as a previous study identified ease of returns as top priority when purchasing online for 89% of consumers. 

We must also remember that every disappointing delivery or returns experience, or every enquiry that takes ages to be resolved, turns a promoter into a detractor. There shouldn’t even be as many enquiries in the first place. However, the other side of the coin is that 90% of customers would choose to shop again following a positive delivery or returns experience. Plus, if the process is positive, consumers are more likely to turn their return into an exchange – a win for brands. 

How delivery and returns are managed currently 

Our research demonstrated the importance of proactive communications when it comes to returning items: 77% of people surveyed said getting timely updates on the progress of their return, refund or exchange, would make them more likely to purchase from that retailer again. Additionally, a quick and simple refund process (42%) was revealed as crucial for customers.

DPack, a packaging supplier solution, recently investigated the returns policies and processes of some of the key UK retailers, considering return window, refund costs, clicks to reach returns page, and type of customer support (live chat, Twitter). The brand with the worst had a very poor return window, a charge to refund and generally poor communication options

On the other hand, the best brands were those that are putting customers first – whether by adopting a human live chat, having a Twitter account, or making it easier to find the returns page. In our own research, which took a neuroscientific analysis approach, we found that the average customer journey score for 10 leading fashion retailers (such as Nike, Adidas and H&M) was 80.7 out of 100. 

The results show that most retailers are pretty much hitting the mark when it comes to offering excellent delivery experiences. But if all brands are doing a good job, it’s so much more difficult to cut through the noise. In turn, brands need to be offering a seamless customer journey where they can communicate through the channel of the customer’s choice. This should apply to post purchase and returns communications as well.  

The future of retail 

Consumer spending habits are no doubt starting to shift as inflation rises. Customers have less money to spend, leading to more selective choices and wanting more for their money. At the same time, delivery and returns are now a major point of differentiation for brands. So, retailers must invest in the full post-purchase journey to both attract and retain the modern customer. 

But retailers still have some catching up to do when it comes to making their DX a point of differentiation. Especially as post-purchase is the only physical touchpoint between the brand and the ecommerce customer. In such a crowded market, that is now being amplified by inflation, brands need to pull out all the stops if they’re going to succeed.

Carmen Carey
Carmen Carey

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