Poor returns cost retailers £200m

18 March 2004
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18 March 2004 | Simon Binns

The UK retail sector is wasting up to £200 million a year through inefficient supply chain practices for the return of unwanted, unsold or damaged goods.

Not Many Happy Returns, a study commissioned by Royal Mail and published by Cranfield School of Management, Sheffield Hallam University and the Institute of Logistics and Transport, suggests that £5.75 billion of goods are returned each year.

The cost to retailers of handling these returned goods, known as "reverse logistics", is around £500 million a year, but could be reduced by as much as 40 per cent - £200 million - with better management of the process, such as cutting the time goods are left in shops before they are returned.

Michael Bernon, senior lecturer in supply chain at Cranfield School of Management said: "The true cost of this could be significantly higher, because companies do not measure the total costs involved, such as the cost of picking and packing returns, and the loss of revenue from having out-of-date stock on the shelves."

Richard Rogers, head of warehousing and distribution at Royal Mail, said the report had uncovered "a financial black hole" in retail supply chains.


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