Importance of a Seamless Returns Process for Luxury Retailers

Luxury retailers create and sell items people aspire to purchase.

Be it to express their individuality, success, or desired association with extravagance. Luxury retail provides people, with the right price, to indulge in the finer things in life.

Luxury brands are defined by their:

• Quality: Luxury retailers may use rare and high-end materials to create unique, luxurious products that differ from high-street items.
• Reputation: A high-class image is essential for building and maintaining a luxury brand's value and influence.
• Celebrity Approval: If celebrities or influencers are snapped wearing particular brands, a retailer's items are often associated with fame and success.
• Price tag: To maintain exclusivity and cover costs incurred to create luxury goods, the price of high-end items is usually expensive.
• Customer experience: Luxury retailers focus on creating customer journeys synonymous with consumer needs and desires.

A few leading luxury retailers you may know of are Hérmes, Gucci, Ralph Lauren Cartier, Dior, Louis Vuitton, Versace, Balenciaga, and Chanel.

Through this post, we delve into the benefits and challenges of being a luxury retailer and the significance a seamless returns process has on a brand's image and reputation.

The Benefits of Being a Luxury Retailer

Brand Recognition: Luxury retailers have a reputation as high-end and associated with the finer things in life.  

Brand Loyalty: Luxury retailers gain a loyal following by attracting customers who enjoy the quality and desirability of their products, alongside superior customer care.

High-profit Margins: Luxury retail is more expensive than high-street shopping. With higher profit margins, retailers can make a substantial return on investment.

Brand Longevity: With an intent to create an iconic, reputable image that prides itself on creating quality goods for customers, successful luxury retailers are primed for longevity.

Cultural Significance: Luxury retailers are symbols of success and social status.

With the benefits of being a luxury retailer uncovered, let's move on to the challenges they face, and how ZigZag can help.

The Challenges of Being a Luxury Retailer

Meeting High Expectations: Customers expect quality when buying from luxury retailers. From the products to the service, maintaining a luxurious image to customers is paramount, yet often challenging.

Coping with Competition: With new and existing retailers striving to capture the public's attention, there are more brands than ever that luxury retailers need to stay ahead of.

Maintain a Prestigious Yet Accessible Brand: Walking the line between being accessible to a wider audience, and maintaining an exclusive brand image is tough for luxury retailers.

Managing Publicity: Marketing luxury items effectively ensures people hold a luxury brand in high regard. Moreover, a bad perception of a luxury brand can destroy its reputation much faster than a fast fashion brand's image.

Marketing Expenses: Finding cost-effective yet inspiring and opulent ways for luxury brands to market high-end products in adverts and with celebrity endorsements is challenging and expensive.

Delivering Luxury Items: Transporting luxury goods safely from the retailer to the customers, and if needed, back again, is essential.

Moreover, delivering items in a timely, presentable manner is necessary to build and preserve a customer's confidence and trust in a brand.

From building a respectable image to making sure goods are delivered fast and in one piece, luxury retailers have a lot to contend with.

Alongside the above challenges, here are a few external factors impacting the luxury retail industry.

External Challenges Facing the Luxury Retail Industry

COVID-19 severely impacted luxury retailers' profits. And just when the sector began to bounce back, the cost-of-living crisis presented another obstacle for retailers. Consequently, people have less money than before to buy luxury items.

Here's an example of how the cost-of-living crisis has changed shoppers' buying and refund habits. A ZigZag study reveals that 35% of shoppers are more likely to return items because of the cost-of-living crisis.

Other pressures on the luxury sector include the ban on tax-free shopping in the UK following Brexit.

Tax-free shopping attracted and stimulated buyers to invest in luxury items from the UK. But since the ban, fewer shoppers are interested in visiting the country and shopping for luxury.

For instance, data from Global Blue reveals that 10% of UK spending in 2019 was relocated by international shoppers to Europe.

Furthermore, non-EU or UK shoppers who previously shopped in the UK and EU in 2019, have increased tax-free spending in Europe by 30% as of 2022.

Since losing tax-free shopping, consumers say they will prioritise other destinations to holiday and shop, which poses a problem for UK-based luxury retailers in locations such as Bicester Village and Oxford Street.

With the ongoing and recent challenges experienced by luxury retailers covered, below we dive into the significance of returns, and how, with ZigZag's advice and technology, we can relieve some of the costly challenges the industry faces.

Why Returns are Important

Customers need a simple, fast returns process to send back items with ease and receive a timely refund.

A successful retailer's returns process has:

• An accessible clear policy that abides by consumer rights
• A system to keep track of and manage all returns and data
• A list of carrier options suitable for transporting luxury products
• A warehouse management team to unload, check, repack and shelve goods

According to a ZigZag survey in 2022, when customers were asked what they were most likely to return, 23% said high-end fashion. See the stats below:

• Fast Fashion - 43.0%
• High-End Fashion - 23.0%
• Electronics - 19.0%
• Sports and Leisure - 15.0%
• Children's - 11.0%
• Home and Garden - 10.0%
• Beauty and Cosmetics - 8.0%

The data shows a large portion of returns are made in the luxury retail sector. As such, making and mastering a returns process that exceeds customer expectations and keeps costs down is crucial for maintaining a luxury image, and profits. Particularly when 84% of consumers check the returns policy before making a purchase.

For more about the challenges luxury retailers come up against in the returns department, and how ZigZag can help solve them, see below for more.

Return and Refund Issues for Luxury Retailers

Luxury items come with an expensive price tag, as such, customers expect a superior experience on their buying journey.

From selecting their items on an aesthetically pleasing website to purchasing and returning goods. Every ounce of the shopping experience matters to customers buying from luxury retailers.

To assist ZigZag has created an adaptable online portal, with lots of carrier options to assist luxury retailers in creating the best return experience for customers with their brand.

Other standouts on the ZigZag portal include alternative refund options, such as store credit, to help retailers keep money in the business, and save the sale. Or Live Exchanges, equally helping businesses to keep the sale, yet allowing customers to swap for other items instead.

We’ve found alternative returns options are beneficial in helping customers access a refund faster.

Quality issues

Customers expect the best products when ordering from luxury retailers, and it’s a business responsibility to fulfil and exceed those expectations.

With the ZigZag portal, luxury retailers can collect and analyse data to ensure a seamless returns process.

For instance, if a higher-than-normal returns rate for a particular product is recorded on the portal. The retailer can remove stock from the website inventory to investigate and fix the problem before reshelving the goods.

As a result, saving time and money in sending and receiving bad stock from customers and eliminating the risk of more customers enduring products of low quality.

Loss of Expensive Products

Moving expensive merchandise around the country and abroad is risky for luxury retailers. With a high price tag attached, goods could be susceptible to thieves or they could get lost on the journey to and from different warehouses and cities.

So, luxury retailers need to be equipped with safe, reputable delivery companies, with staff skilled in handling and managing a large amount of expensive goods.

ZigZag focuses on sourcing and partnering with over 1,500 carriers it trusts. Namely carriers with sophisticated tracking software, that provides regular updates for retailers and customers, to keep everyone in the delivery loop.

Sizing Issues

Luxury clothing in particular, is often featured in sizes that only fit a certain size and shape. Consequently, customers may order multiple items in different sizes to try and see what fits.

Sizing is a popular return reason concerning luxury products, because luxury retailers especially, often use a similar model-esque physique to create garments.

To solve this problem, augmented and virtual reality technology can assist customers in trying on clothes virtually.

This means customers are less likely to buy clothes that don’t fit, and it stops people from over-buying items that may need returning.

Other helpful solutions to prevent or eradicate unnecessary returns include:

• Luxury retailers provide better sizing guides for customers
• Videos of products in action, showing all angles and uses
• Potentially expanding the range of models used to create clothes. Adopting an inclusive measurement system may also help a luxury brand's reputation.

High Costs

From choosing premium delivery options to investing in high-end packaging. Delivering items in perfect condition, on time is costly for luxury retailers.

The solution for combating high returns costs? Use ZigZag, we work with reputable delivery companies and offer our customers competitive rates to keep delivery costs down.

Moreover, designing durable, reusable packaging for goods that not only protects items from damage on delivery but can also be used by the customer to return the item is useful and cost-effective.

Clothes to Landfill

To protect a luxury brand's exclusivity and price, many won’t sell their clothing on marketplaces for less, which could result in damaged or out-of-season stock going to landfill.

But, sending garments to the landfill is problematic for two reasons. Firstly, it negatively impacts the environment, and secondly, if customers are made aware that luxury garments are going to landfill, it could tarnish a brand's image.

To lessen a retailer's environmental impact and remain in good standing with consumers it's beneficial for luxury retailers to consider refurbishing and reselling items or creating eco-friendly items.

Arguably, pre-loved and refurbished luxury clothing allows people to experience a brand's items for less. Potentially winning a brand-new customer who would never have ordinarily purchased an item from a luxury retailer. Thereby, inspiring new people to purchase a brand they may buy full-price items from later on.

Importance of Loyalty

Luxury brands often have a smaller customer base and attracting and maintaining new customers through advertising is expensive. As such, preserving customer loyalty is cost-effective and crucial for the ongoing success of the brand.

With a smaller customer base to engage and expensive advertising to contend with, luxury retailers can strengthen customer loyalty through providing exceptional service - and part of that involves providing a seamless returns process, which ZigZag can help with, that’s easy to grasp, and simple to go through.

Staging

Staging is where customers purchase clothes and wear it for a social media post to show off and present a high-class image - and then return the items later on for a full refund.

While proving who is staging is difficult, ZigZag’s portal allows luxury retailers to check out customers exhibiting unusual buying behaviours such as regularly buying and returning items without keeping any purchases from the retailer. Or otherwise buying clothes in bulk only to return them shortly for a refund.

Once a business discovers shoppers who may be taking advantage of the system, they can ban their accounts to stop them from making future purchases for staging.

Wardrobing

Prevalent in the luxury fashion industry, some consumers will buy items to indulge in a practice called wardrobing.

Wardrobing entails consumers who can't afford luxury clothing, buying, wearing and returning clothes for a full refund.

With the aftereffects of COVID-19 still looming, and the cost-of-living crisis rising, it's wise for luxury retailers to consider incorporating new, affordable practices to stimulate buying behaviour such as renting out garments.

In doing so, retailers allow customers to indulge in wardrobing legally and at a fraction of the cost of buying permanently. After the rental, items are cleaned and restored ready to lease to the next customer.

This solution is ideal for luxury retailers wanting to explore new revenue streams and allows consumers to share a slice of luxury by renting instead of purchasing an item.

Why Luxury Retailers Should Choose ZigZag’s Portal

As a supportive partner to hundreds of retailers, ZigZag makes a consistent effort to research the challenges luxury retailers face with returns and consistently devise solutions to manage and fix those problems.

Economic factors, including the cost-of-living crisis and a ban on tax-free shopping, are just a few ways the luxury retail sector requires innovative solutions to help save costs and build profits.

With the ZigZag online returns portal, luxury brands can tailor the returns experiences with their own branding and preferred language. Providing each customer with an individual login page to initiate returns with ease.

Should a retailer require assistance, the ZigZag team is on hand to help with their expert knowledge and connections in the returns and refund space.

‘Our returns service is fast and convenient and we are delighted that, by partnering with ZIgZag, it will be available to a whole new network of retailers’ Peter Fuller, Chief Executive Officer

From providing a list of suitable carriers to suggesting options for saving the sale, to offering unrivalled customer service, ZigZag is adept in creating and managing smarter successful returns systems that are cost-effective and in sync with luxury retailers' wants and needs for their customer experience.

Discover how ZigZag can elevate your luxury brands service with smarter, faster returns, by booking a live demo today.

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