Morning Brew - ☕ Diminishing returns

The financial impact of the returns process.
December 05, 2022

Retail Brew

Ordergroove

Happy Monday. It’s that time of year when we reflect on trends that have taken over the retail industry. So we have enlisted you, the dedicated Retail Brew reader, to let us know what you think has been overhyped or overlooked in 2022.

Here is a link to a survey, whose results will be used for an upcoming year-end story. If you could please take five minutes to fill it out, we’d be eternally grateful.

In today’s edition:

—Katishi Maake, Jeena Sharma

RETURNS

Reverse logistics nightmare?

Desktop computer with shipping boxes and money Francis Scialabba

With Black Friday and Cyber Monday in the rearview mirror, retailers should soon expect a flood of returns from shoppers.

As Retail Brew previously reported, companies have very different approaches to returns, and those differences are exacerbated during the holiday shopping season. Retailers don’t like returns, but why? The short answer is the cost and logistics nightmare returns can present, but there are some things retailers could consider to recoup even a fraction of what’s lost in the process.

No turning back: Total retail returns accounted for more than $761 billion in merchandise for US retailers in 2021—nearly 20% of which occurred in November and December—according to the National Retail Federation. “For every $1 billion in sales, the average retailer incurs $166 million in merchandise returns,” according to the trade association.

Returns are largely seen as a pain point in retail, for customers and retailers. According to an October 2022 report from return logistics company Happy Returns, 79% of consumers surveyed attempt to avoid mail-in returns if they can, and 40% said they would rather sit in rush hour traffic than return an item purchased online. 

  • Happy Returns offers in-person returns for online purchases, which allows shoppers to bypass mailing.

“This is really, from a consumer standpoint, about speed and ease,” David Sobie, VP of Happy Returns, told Retail Brew. “Don’t make me print labels, don’t make the box items up, don’t make me wait in line at the post office, and most importantly, don’t make me wait to get my money back.”

A pretty penny: For the most part, big box retailers send their returns back to the vendor, but it’s often a complicated process that incurs heavy costs, Sender Shamiss, president and CEO at reserve logistics firm goTRG, told Retail Brew.

Keep reading here.—KM

        

TOGETHER WITH ORDERGROOVE

Meet your brand’s new BFF

Ordergroove

Feelin’ anxious about retaining customers and building new streams of revenue? Battle rising costs and stiff competition with the retail experience *proven* to help battle uncertain markets: subscriptions.

Subscriptions strengthen your brand’s relationship with its best customers and provide a convenient shopping experience. And the experts at Ordergroove outline everything you need to know about building a successful subscription strategy in one handy report.

Learn how leading DTC brands turn run-of-the-mill subscription experiences into marketing-defying revenue streams, and get the lowdown on:

  • how to make your brand stand out in a crowded market
  • ways to turn a subscription offer into a brand experience
  • advanced subscription tactics you can rely on in 2023

Make subscriptions your new BFFL and read Ordergroove’s full write-up here.

LUXURY

French connection

Diptyque store in Georgetown DC Diptyque

If you’ve smelled a mellow but lingering French fragrance while walking down the street lately, you might be next to a new Diptyque store.

The Parisian luxury fragrance retailer, with stores across New York and Los Angeles, is bringing its concept stores to other parts of the US, starting with a pop-up in the Georgetown neighborhood of Washington, DC, which opened in October. This was followed by openings in Williamsburg, Brooklyn, and Fillmore Street in San Francisco, and another store is also in the works at Caesars Palace in Las Vegas—all with the goal of making a trip to a Diptyque store an experience, while also strengthening its DTC channels.

Every store has a “different story,” Julien Gommichon, Diptyque’s president of the Americas, told Retail Brew. The long-standing Williamsburg location, for instance, was simply renovated and reopened to offer an elevated in-store experience. The changes include unique artwork and touches that exemplify Parisian culture.

Custom-made: Others, like the new store in DC, were designed to resemble an observatory (inspired by Diptyque’s Map of Stars collection) complete with compasses and, well, stars. The common thread across all these new stores is making the post-pandemic return to the store an experience.

“During the pandemic, we were a category of product that was really searched for…[We were] able to increase our awareness during that period,” Gommichon said. “It has been an important moment where there was probably frustration to be at home or to [not] be able to go out and do some shopping.”

Owning it: Diptyque plans on capitalizing on this large appetite for its products in the US by not just furthering its investment within fragrance and candles, but also growing out its other (fairly new) categories, like decor. And it wants to do that in its own stores as it zeroes in on a DTC strategy.

Keep reading here.—JS

        

TOGETHER WITH SAILTHRU

Sailthru

Engaging the engaged. How did Brilliant Earth grow their DTC fine-jewelry business? By leveraging data. Data enabled them to expand their digital and physical footprints, expertly convert first-time shoppers, and experience double-digit growth. Sailthru’s on-demand session explores how Brilliant Earth leaned into a successful omnichannel strategy—watch it here.

SWAPPING SKUS

Today’s top retail reads.

Losing their cool: Hundreds of Yeti coolers are washing up on beaches from Alaska to Hawaii, thanks to overboard shipping containers. “You’ll be getting reports of people finding Yetis for the next 30 years,” said oceanographer Curtis Ebbesmeyer. (the Wall Street Journal)

Bedrock values: The Flintstones went off the air in 1966, so why are they still selling popular cereal and vitamins? (Marketplace)

MoreDash? How better tips might mean faster delivery on restaurant apps. (CBC)

Learn: We’re in the last month of 2022. Are you prepared to take on a recession? Get a handle on how numbers tell you where to take your business with the Brew’s Business Analytics Accelerator.

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THE RISE OF RETAIL MEDIA NETWORKS

Together with Insider Intelligence

Together with Insider Intelligence

Retail media networks are growing rapidly. Our analysts review trends in retail media ad spending and provide predictions for 2023 and beyond.

Download your report now.

WHAT ELSE IS BREWING

  • Apple reportedly is planning to resume advertising on Twitter.
  • The Laundress is recalling 8 million laundry and cleaning products due to possible bacterial contamination.
  • Rolex launched a certification program for pre-owned watches.
  • Balenciaga’s creative director personally apologized for widely condemned ads featuring children who held teddy bear-shaped bags in what appeared to be bondage gear.
  • France passed a law that will require large parking lots be covered with solar panels.

HOT TOPIC

At the mall, it’s where band tees are the only tees. In Retail Brew, it’s where we invite readers to weigh in on a trending retail topic.

In the past, as Retail Brew’s Jeena Sharma reported recently, Victoria’s Secret has been slammed for promoting unrealistic beauty standards, sexism, and discrimination (over which the company expressed “regret”)—all leading to a dip in its market share as competitors began to embrace more inclusive and plus-sized offerings.

But the brand has been trying to turn its image around:

  • Victoria’s Secret’s recent acquisition of AdoreMe, a DTC women’s intimates brand known for its extended sizing, has been seen as a signifier in its commitment to redeeming itself from a dubious past.
  • The brand also has embarked on an overhaul strategy by hiring a diverse range of brand ambassadors and promoting inclusive messaging in its campaigns.

You tell us: Are Victoria’s Secret’s recent efforts to hire more plus-sized, diverse, and trans models resonating with you, or is your impression of the brand more tied to past criticisms that it promoted unrealistic beauty standards?

Circling back: Last week we asked you about two-day shipping, a standard popularized by Amazon with its Amazon Prime subscription. As Retail Brew’s Andrew Adam Newman reported, as consumers become more aware of the environmental impact of fast shipping—not to mention all those harried warehouse workers—some retailers are reframing slower shipping as a feature, not a flaw.

So we asked when it comes to non-grocery items that you order online with free shipping, what is the slowest shipping speed that you think is acceptable for most purchases? Only 1.7% of you said that two days or fewer was the slowest acceptable shipping speed for you. The most popular response was five to six days (42.4%), followed by seven to nine days (30.5%) and three to four days (25.4%).

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Written by Katishi Maake and Jeena Sharma

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