Wednesday 21st Nov 2018 - Logistics & Supply Chain

You can please customers and cut costs, says Tesco returns chief

16-18 Omni14 logoProviding a returns policy that pleases customers needn’t run counter to the necessity to cut costs, Ian Towell, head of general merchandise multi-channel returns at Tesco, told delegates at the OmniChannel Conference in Birmingham yesterday.

“I think it’s possible to do both,” Towell said. “You can provide a great customer experience and break even.”

However, he said, the changing nature of retail has been presenting some hurdles that need to be overcome. With 80 per cent of returns coming through one of the supermarket’s 2,500 high street click and collect stores, Towell noted the importance in having stores connected to the online retailer.

“With 75 per cent of returns the result of customers seeking a replacement for a faulty product, it is important that the store knows it is not just meant to be handing over the replacement but also receiving the return,” Towell said. “Our systems don’t fully support this and as such it is resulting in stock loss.”

According to Towell, from a poll conducted by the supermarket, 37 per cent of respondents stated that ease of returns and exchanges were a major factor in their retail experience.

Towell said customers are more likely to discuss a negative retail experience than they are to discuss a positive experience. As a result, he believes that providing customers with a “great returns experience” equates to stronger customer advocacy and loyalty.

Opening the conference on Wednesday, Dino Rocos, operations director of John Lewis,highlighted the impact that omni-channel is having on retail supply chains.

Retailing is changing fundamentally. A hundred years ago the retail environment was very personal to the individual. By the 1950s the market was moving to mass retailing.

But now the market is moving to the next stage: “mass personalisation”, he said.

Historically, bricks and mortar worked well for John Lewis for 140 years. But 12-15 years ago the market changed with the rise of internet shopping creating new sales channels.

However, said Rocos, “we shouldn’t be segmenting customers into the channel.”

He pointed out that a customer today might examine a product in-store, buy it online, and the collect it from a store.

“Omni-Channel for is about a seamless experience for our customers,” he said, pointing out that  when you get it right and customers spend more across the channels.

Rocos highlighted the importance of stitching together the difference elements. We started with click and collect and today 55 per cent of our internet business is click and collect. Only 45 per cent delivered to customer.

The one thing that hasn’t changed for John Lewis is the fundamental base of business: value, assortment, service, trust. The retailer’s business falls into three equal segments: fashion, home and electricals.

Getting staff to buy into the process was also critical, he said. One way has been to allocate online sales to individual branches so that internal perceptions don’t get in the way.

John Lewis has been investing some £400 million in its supply chain to meet the demands of omni-channel.  Its change programme, entitled Programme Q has four key elements:
1. Getting the right stock in right place at right time
2. And agile supply chain that exploits scale to drive efficiency
3. Empowering partners driving operational excellence – more comprehensive package of training to give staff skills.
4. Fulfilment beyond customer expectations

Rocos went on to analyse some of the challenges facing retailers. The first was moving from a “mass” retail proposition to “mass personalisation”. “Do you have clarity over proposition? You need to understand the customers and where they are on their journey.”

There is also a financial challenge to align financial reporting to the Omni-Channel world.

And in supply chain, there are challenges of speed, synchronisation and agility on end to end basis.

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