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Winning Strategies for Returns Management

BY CSA STAFF

By Jim Rallo, president, retail supply chain group, Liquidity Services Inc.

The retail industry has seen its fair share of challenges in recent years with decreased foot traffic through stores as consumers move online to purchase products. Regardless of where consumers purchase goods, returns are an issue with the NRF estimating the amount of merchandise returned in 2013 totaling $267.3 billion.

To improve cost efficiency, retailers are working to improve overall supply chain performance. In addition, increased use of social media and changing regulations has emphasized the importance of brand protection and the need to support sustainability initiatives across the enterprise. By addressing these trends through the reverse supply chain where returned and overstock inventory is managed, companies can focus their employee time on customer interaction and increase recovery in secondary markets while supporting the larger strategic goals of the organization.

A Better Way Forward for Returned and Overstock Inventory
Retailers invest millions to bring customers into their stores and increase interaction with their brand. However, when a customer decides to return an item, the behind-the-scenes process receives significantly less attention, and has the potential to cost retailers valuable margin and buyer loyalty. By working with a trusted provider to address challenges and leveraging trends in the reverse supply chain, retailers can align their returns process with best-in-class practices.

Create a High-Performance Reverse Supply Chain
Working harder to obtain market share means the costs to stay top-of-mind have continued to increase, while retail sales have slowed. To remain competitive, retailers have to optimize their supply chain, decreasing costs. A capable service provider can work with a retailer to leverage technology and proven processes to streamline operations.

For example, many retail warehouses boast sophisticated warehouse management systems (WMS) to manage the forward flow of goods, but few invest in a robust WMS for the reverse supply chain. Vendors should be able to handle both sides of the profit equation. On one side, they can manage costs through accessible distribution centers equipped with world-class WMS and data and analytics to measure results. On the other side, they play a role in managing revenue – driving higher recovery by tapping a large buyer base and providing superior marketing and sales strategies.

Protect the Brand in Secondary Markets
Secondary markets can be fraught with risk. Without appropriate guidance, a retailer’s brand can be negatively impacted. Comprehensive vendor services should include data wiping on electronics to ensure that customer data on a returned laptop, game system, or tablet, does not end up in the wrong hands. Second, retailers need to manage merchandising to ensure that products are accurately described. In a recently conducted survey, we found that 79% of consumers consider accurate product information on refurbished products to be important. Third, retailers have to manage where product is sold. From EBay to boutique online stores to flea markets, there are a number of places where returned product could potentially end up. By directing the right product through the right channels, audiences are appropriately targeted.

Finally, it’s critical to manage the customer experience – which varies by channel. The same customer that enjoyed a top-notch in-store engagement might have a frustrating experience in secondary markets, potentially costing the retailer their brand loyalty. Rather than leaving the brand open to potential risk by selling product through a channel that lacks a customer service department or utilizes incomplete product information, a retailer can ensure that channel use aligns with larger company goals by employing a vendor who knows how to navigate secondary markets. Vendors should also be able to provide retail clients with complete transparency into the process with regular reporting against the metrics needed to ensure success.

Focus on a Sustainable Process
Retailers can boost sustainability metrics for the entire company by following the “R” Cycle in returns management: Re-use, Re-furbish, Re-commerce, Re-distribute, and then Re-cycle. The return-to-vendor (RTV) process often hinders efforts to improve sustainability due to landfill disposal protocols. In addition to being environmentally-unfriendly, this practice includes expensive landfill fees on top of lost profits. An experienced provider will be able to work between retailers and OEMs to create mutually-aligned incentives in the RTV process, ultimately deferring product from landfills, providing a second life for goods, and improving brand loyalty for environmentally focused customers.

Conclusion
With the right process and the right partner, managing returns and dealing with overstock does not have to be a headache. The reverse supply chain provides opportunity for retailers to create competitive advantage and produce results that support larger strategic goals, whether that be streamlining the supply chain, improving brand perception, or enhancing sustainability initiatives. By better managing the returns management process, retailers can increase recovery and cut costs, while addressing risks in the new retail supply chain with winning strategies.


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A.Boon says:
Apr-16-2014 03:29 pm

Technologies can help retail
Technologies can help retail industries in a large way to ensure quality products throughout their supply chains. Constant Innovation and new strategies will help retailers improve their shipping and delivery systems. This will directly reflect in their productivity. I work for McGladrey and there's a very informative whitepaper on our website that readers of this article will be interested in. @ “Count, manage and move: Warehouse inventory control strategies “ http://bit.ly/1kgYXWo

A.Boon says:
Apr-16-2014 03:29 pm

Technologies can help retail industries in a large way to ensure quality products throughout their supply chains. Constant Innovation and new strategies will help retailers improve their shipping and delivery systems. This will directly reflect in their productivity. I work for McGladrey and there's a very informative whitepaper on our website that readers of this article will be interested in. @ “Count, manage and move: Warehouse inventory control strategies “ http://bit.ly/1kgYXWo

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FINANCE

DSW moving into Canadian market; buys 44% stake in Canada’s Town Shoes

BY Dan Berthiaume

Columbus, Ohio — In a move to establish a base in Canada, DSW Inc. has entered into an agreement to buy an approximate 44% stake in Canadian footwear retailer Town Shoes. The transaction, expected to close in May, is valued at approximately $62 million. Under the agreement, DSW will have the right to purchase the rest of Town Shoes after four years.

With sales of $264.7 million in its last fiscal year, Town Shoes is Canada’s largest footwear retailer, operating 182 stores, primarily under The Shoe Company, Shoe Warehouse and Town Shoes banners. It is owned mainly by Alberta Investment Management Corp. and Callisto Capital, a Canadian private equity firm.

“We have looked at Canadian entry options for some time and decided to acquire an existing operation with a long track record of success and to use this operation as a base from which we can establish the DSW brand in Canada,” DSW president and CEO Mike MacDonald said. "Our partnership provides us a unique opportunity to bring DSW into Canada through Town Shoes’ platform. We hope to share best practices in sourcing, operations, inventory management, and omni-channel integration to our mutual advantage."

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Aaron’s acquires Progressive Finance Holdings

BY Dan Berthiaume

Atlanta — Aaron’s Inc. has acquired Progressive Finance Holdings LLC, a merchandise lease-to-own company, from Summit Partners in an all-cash transaction valued at approximately $700 million. Aaron’s expects the transaction to be double-digit accretive to cash earnings per share in 2014 and significantly more accretive in 2015.

Through this acquisition, Aaron’s gains an entry point into the virtual rent-to-own ("RTO") market and will operate Progressive as a wholly owned subsidiary of Aaron’s. John Robinson, Progressive’s CEO, will join the Aaron’s executive leadership team as executive VP and CEO of Progressive, reporting directly to Ronald W. Allen, CEO of Aaron’s.

"This is a highly complementary and transformative acquisition for Aaron’s, and we are eager to capture the significant opportunities this combination will provide for our customers, franchisees, and shareholders," said Allen. "We expect that with Progressive’s best-in-class virtual customer payment capabilities, coupled with our industry leading traditional lease-to-own model, we will create an omni-channel business, providing customers with better payment options, and enhancing Aaron’s competitive position."

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