Rising Cost-of-Living Pressures Make Return Policies Crucial for Retail Success, Reveals Manhattan Associates Study
As cost-of-living pressures mount and the post-End of Financial Year (EOFY) period settles in, the retail landscape is being reshaped by a critical factor: return policies. New research from Manhattan Associates Inc. (NASDAQ: MANH) reveals that consumers are becoming increasingly cautious with their purchases making flexible and customer-friendly return options more essential than ever. The study showed that 72% of respondents are now more inclined to return products due to financial pressures, underscoring a shift towards more discerning purchasing behaviour.
“Consumers are more selective than ever,” said Raghav Sibal, Managing Director, Australia & New Zealand for 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.”
Consumers Consider Return Policies When Purchasing
The research 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.
Additionally, 40% of respondents will actively research a store's return policy before making a purchase. While many consumers have become conditioned to expect free returns, there has been a notable shift in how they view and interact with return policies, reflecting an unspoken awareness and acceptance of changing policies.
In-Person Returns Brings New Opportunities
With physical store foot traffic impacted by cost-of-living increases, rethinking return policies presents new opportunities for brick-and-mortar stores. A notable 65% of consumers report higher satisfaction with in-store returns, suggesting that encouraging in-person returns can boost customer satisfaction and drive additional sales.
Charging for online returns could incentivise customers to visit physical stores, potentially increasing in-store sales. Furthermore, 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,” 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.”
Building Customer Loyalty Through Positive Return Experiences
A positive return experience is pivotal for customer loyalty, with 91% of respondents indicating it makes them more likely to become long-term customers.
“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,” Sibal concluded.
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