Reality bites as Zara charges for online returns
A challenge online retailers have recently faced, while scaling aggressively during the Covid-19 outbreak, is how to deliver a customer experience that includes fast shipping and free returns.
The growing volume of returns, the associated environmental impact and abuse, the latter including practices such as wardrobing or purchasing multiple items and returning the majority, is negatively hitting margins and reputations to the extent that companies feel the only choice is put a charge in place.
Zara has followed Next and Uniqlo in doing this, and more retailers will likely follow suit.
Remember during the coronavirus outbreak when various industry observers kept telling us that physical retail was done and the future was online?
How silly do they look now?
Reality can be a bitter pill to swallow, and the likes of Zara charging for online returns is a great example of the new normal as lockdowns and restrictions fade away and old habits return.
UK online retail sales fell -12% year-on-year (YoY) in April, according to the latest IMRG Capgemini Online Retail Index, which tracks the performance of over 200 brands.
With last month’s results representing the first time in two years that the Index was not skewed by pandemic lockdown comparisons, expectations for a return to pre-Covid patterns had been high.
However, there was no actual growth in online sales – with last month’s performance simply mirroring April 2021’s growth of +12%.
With rising supply chain costs feeding through into product prices and cost of living increases showing no signs of slowing down, shoppers are taking longer to make purchase decisions and retailers are having to rely more heavily on discounting to stimulate activity – particularly for smaller goods.
Andy Mulcahy, Strategy and Insight Director, IMRG, says: “Throughout the pandemic, there was much speculation as to what the ‘new normal’ might be once everything has settled down again.”
“After two years of huge volume increases online, it would seem that growth is now over – this is not just a reflection of the pandemic effectively coming to an end in many people’s minds, the new phase of higher costs and bills is creating very unpredictable patterns of behaviour among shoppers.”
“Many retailers report sluggish response to activity and erratic spending, and it feels like this is only the start of a tough year for UK shoppers.”
Lucy Gibbs, Senior Manager, Retail Lead for Analytics & AI, Capgemini, adds: “Demand for certain categories became less predictable during the pandemic due to external factors and changes in behaviours and lifestyles.”
“As we start to move on, we are seeing some signs of a return to norm, however it is clear that shifting priorities around new cost pressures and economic factors will also influence future demand patterns.”
She concludes: “As uncertainty continues to reign, this reenforces that retailers and brands will need to remain agile and resilient – listening to customer needs, where consideration will likely now focus on price point, necessity and value, to create a standout experience and drive other factors to maintain loyalty.”
