Reducing the cost of supermarket returns

One of the consequences of customer product returns is that they can increase retail costs and with supermarkets increasing their online and in-store non-food market share, returns are becoming one of the most topical issues in the industry. This paper is relevant to the field of reverse logistics which is becoming a crucial channel within the retail supply chain, involving the integration of information, transportation, warehousing and product handling.With liberal ‘no quibble returns guarantees’, the scale of the problem is set to rise. Typically in Europe the consumer can return any defective product through a store or direct by post (for those purchased online) to the retailer within 14 days and request a replacement or a credit. The product doesn't have to be defective and so the major consumer areas generating returns is non-food products, particularly electrical products sold in-store and online. The costs of retail returns are becoming more and more important both in terms of the profitability for retailers and the need to manage down the transportation, warehousing and handling costs associated with these large scale returns operations. A fundamental issue therefore is to understand how better to manage returns processes.