Returned goods ‘crucial’ in store fight

12 December 2002
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12 December 2002 | David Arminas

Logistics providers that repackage, sort and return unwanted stock to manufacturers will become more important to grocery stores as they battle it out in the non-food sector during the coming year.

Stores including Tesco, Sainsbury’s and Safeway stock televisions, stereos and clothes because the profit margins are high.

But as returns are higher on these goods, grocery stores will need reverse logistics providers to repackage, sort and return them, said Dr Paul Chapman, a researcher at Cranfield Centre for Logistics and Transportation.

“To get low prices on the TVs and stereos, many of the goods will have been sourced on a no-return basis, creating a redundant stock problem,” he said.

Grocery stores and reverse logistics providers will have to contract out to “jobbers”, companies that buy the goods to resell to low-price retailers, he said.

Peter Davey, supply chain director at the Institute of Grocery Distribution, said the problem worsens after Christmas.

“The headlong rush by grocery retailers into non-grocery items has been for the better margins, and so reverse logistics providers and jobbers will figure more prominently in their supply chains this year,” he said.


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