What would a responsible version of retail do? Aim for 100% return rates

The British high street, to understate things somewhat, is not in a good state.

The point at which retail collapses in on itself – and has to be reset – has been coming for a long time. All the indications are that we may be getting rather close.

The response has been – from a retail perspective at least – at best underwhelming. The various solutions put forward often seem to lack genuine innovation and feel suspiciously like more of the same. Something more radical and fundamental is required, but if we aren’t willing to be serious about evolving retail’s place within the 21st century version of high streets, it won’t have one.

As part of my day job – at IMRG – I took part in the government committee hearings into what needs to be done. During that process I put forward a suggestion that we take the many vacant stores across the country and, instead of just trying to fill them out as retail stores in the traditional sense (or: going back to square one), start to create a network of ‘inventory hub’ concept stores that are built digitally from the ground up.

This means that, whereas up until now we have tried to insert click & collect services into stores that weren’t originally built to host them, the whole format and layout would be developed around facilitating it.

These click & collect inventory hubs should also not be specific to a single brand, but be brand-agnostic by default. They serve as collection points for anything available on the internet and, therefore, must overcome the traditional issue of physical spaces being restricted to single brands. While some single-brand stores will always exist, in many cases they cannot compete with the choice, availability and convenience of the internet.

The reasons why it would be beneficial to really get behind an infrastructure based around click and collect are multiple – finding a modern purpose for stores, bringing the offline / online channels together, greater opportunities for consolidation, reducing the environmental footprint. But this is not just about what goes out; what comes back is just as important a consideration.

Around 25% of products sold online are returned (there is, of course, variation by product category). We have typically been inclined to view this as a business problem; getting that rate down can save a substantial amount of money for the retailer. But times have changed – it is no longer predominantly about profitability, because environmental performance is becoming a huge pressure point that demands shifts in priority.

I want to suggest that the pressure is so great that it calls for dramatic changes to traditional business thinking and the rules that underpin it. We need to work towards a model for retail that doesn’t see returns as a problem, but openly encourages high rates – and rebuilds the infrastructure around that.

This entails using data in a far more collaborative and intelligent way so that, in time, retailers purposefully create and sell far less than they do today. The ‘pile it high, sell it cheap’ approach that dominates retail currently needs to be replaced by a business-to-customer consultative approach, whereby effort is taken to understand the context of that customer’s requirements in each purchase, so the item they end up with is something they genuinely need or want and will get use from over time. The era of throwaway consumerism has to go if retail is to make sense again.

And then, when they don’t need it anymore, it is returned – probably through an inventory hub – so someone else can use it. Not just within the two-week ‘cooling off’ period enshrined in law, but even years later. That is miles away from conventional retail logic, but it would represent a modern version of retail appropriate to the age.

For the industry is, in its current form, I would argue, simply no longer fit for purpose. If the 2010s was the decade when retail got serious about digital, the 2020s is the one where it has to grow up and become responsible.

And that requires the identification of new business models and metrics for measuring success. The high street as we know it is dead; but its potential rebirth is something to be very excited about.