Online returns versus sales: Retailers more likely to be penalised than credited

By Paul Norman - Monday, January 08, 2018 12:01

Retailers are 1.6 times more likely to be penalised for online returns than credited for online sales within their catchment, according to Savills.

The firm’s new Online Sales vs Online Returns report found that one in three stores have online returns deducted from their bottom line while only one in five are credited for online sales taking place nearby.

Across all retail and leisure sub-sectors, gyms and cinemas were most likely to record online sales from their local catchment, at 91% and 83% respectively.

This is linked to structural changes within these sectors such as the increasing trend for unmanned gyms and cinemas, says Savills. Conversely, bookmakers (8%), opticians (10%) and fast food or takeaway (14%) were least likely to record online sales.

At a category level, accessories retailers were almost 10 times more likely to be penalised for an online return than credited for an online sale, followed by confectionary (3.5 times more likely) and stationery (3.3 times more likely). Conversely, only the grocery and food & beverage categories saw a positive differential between online sales accreditation and penalisation for online returns.

Graeme Clark, head of shopping centre management at Savills, said: “With many retailers on turnover arrangements, this research highlights the inconsistency of approach across the industry to the treatment of online sales and returns and ultimately the reporting of gross turnover at store level. It is clear that there are still wide variations between categories and better communication is needed, as 11% of store managers surveyed did not know whether they were credited for online sales.”

In terms of returns, the report found 48% of stores will refund online purchases. This is most pronounced in the footwear category, for which nine out of 10 stores permit online returns, followed by stationery (85%) and womenswear (82%).

The report also found that click & collect now accounts for circa 8% of in store sales, with 47% of stores offering such a service. Music, books and games retailers were most likely to offer click & collect (84%) followed by sporting goods (83%) and mobile phone retailers (75%). By contrast, less than 10% of opticians, confectionary and fast food or takeaway retailers offer click & collect. Additionally, 37% of retailers across the board offer the facility to order online while in store.

Stephen Toal, property management research director at Savills, added: “Looking ahead, landlords and their occupiers need to continue engaging with each other to understand the role physical stores are playing in the omnichannel process. This will help to ensure an equitable outcome for both sides and to ensure the health of the physical store going forward.”


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