Returns Optimization and Customer Experience: Reducing Friction and Cost in the New Retail Landscape

Returns have become a defining challenge—and opportunity—for Australian retailers navigating the complexities of omnichannel commerce. As consumer expectations for seamless, flexible, and hassle-free returns rise, so too do the operational costs and risks associated with reverse logistics. Yet, for those who act boldly, returns optimization is not just about cost containment; it is a powerful lever for customer loyalty, operational efficiency, and long-term profitability.

The Returns Challenge: Friction, Cost, and Customer Expectations

Australian shoppers are more digitally savvy and discerning than ever. They expect to move fluidly between online and in-store channels, with the ability to return products wherever and however is most convenient. In fact, flexible return policies and free return shipping are among the top reasons consumers choose online-only retailers. At the same time, nearly half of consumers actively look for easy return options when selecting where to shop online, and only 45% are satisfied with the digital returns process today.

For retailers, the stakes are high. Returns can erode margins, disrupt inventory planning, and create operational bottlenecks. In apparel, for example, the practice of “bracketing”—buying multiple sizes with the intention of returning those that don’t fit—is common, driving up both shipping and processing costs. In grocery and specialty retail, the need for speed and accuracy in returns is compounded by the perishability or high value of goods.

Turning Returns into a Loyalty and Efficiency Engine

The most successful Australian retailers are reframing returns as a strategic touchpoint in the customer journey. By leveraging data, AI, and omnichannel integration, they are reducing friction, controlling costs, and building trust. Here’s how:

1. Segment Customers and Products for Smarter Returns Management

Not all returns are created equal. By analyzing returns history, purchase behavior, and product attributes, retailers can segment customers and products to tailor their approach:

High-frequency returners can be incentivized to use cost-effective return channels, such as in-store drop-off or click-and-collect locations.
Bracketing behaviors can be managed by limiting the number of items per order or introducing dynamic shipping fees for excessive returns.
Seasonal or high-value items can be prioritized for rapid return and resale, protecting margins and reducing markdown risk.

2. Incentivize Cost-Effective Return Methods

Encouraging customers to choose return options that are both convenient and cost-efficient is key. Actionable steps include:

Offering personalized in-store deals or loyalty points for customers who return online purchases in-store, creating opportunities for immediate exchanges or upselling.
Designing dedicated in-store return areas, equipped with digital tools, to streamline the process and reduce wait times.
Providing dynamic shipping labels that route returns to the optimal distribution center, minimizing unnecessary transport and accelerating restocking.

3. Leverage AI and Data to Predict and Prevent Returns

AI and advanced analytics are transforming returns management:

Predictive modeling can identify products or customer segments with a high likelihood of return, enabling proactive interventions such as enhanced product information, sizing tools, or targeted recommendations.
Personalization engines can guide shoppers to the right product the first time, reducing the need for returns. For example, AI-powered fit tools in apparel or augmented reality for home goods help customers make more confident choices.
Returns data can be fed back into product development and merchandising, highlighting quality issues, fit problems, or gaps in product descriptions that drive unnecessary returns.

4. Streamline Reverse Logistics for Speed and Sustainability

Operational efficiency in returns is critical to protecting margins and meeting customer expectations:

Real-time inventory visibility and unified data platforms allow retailers to route returned items to the location where they are most needed, reducing excess stock and markdowns.
Automated sorting and processing, powered by robotics and AI, accelerate the speed to resale, especially for high-turnover or seasonal products.
Sustainable practices—such as eco-friendly packaging for returns and optimized transport routes—reduce environmental impact and appeal to values-driven consumers.

5. Balance Cost Control with Customer Satisfaction

While it’s tempting to focus solely on minimizing returns costs, the customer experience must remain front and center. Retailers who strike the right balance see measurable gains in loyalty and lifetime value:

Transparent, flexible return policies build trust and reduce purchase anxiety, especially for first-time or high-value purchases.
Empowered store associates, equipped with digital tools and real-time data, can resolve returns quickly and turn them into opportunities for positive engagement.
Data-driven segmentation allows for differentiated policies—rewarding loyal, low-return customers with more generous terms, while managing risk among high-frequency returners.

Actionable Steps for Australian Retailers

Audit your current returns process across all channels to identify friction points and cost drivers.
Integrate returns data with customer and product analytics to enable segmentation and targeted interventions.
Pilot AI-powered tools for predictive returns management, such as fit recommendation engines or dynamic shipping label generation.
Redesign in-store and digital returns experiences to incentivize cost-effective behaviors and create upsell opportunities.
Continuously monitor and refine your returns strategy, using data to inform product development, merchandising, and customer engagement.

The Path Forward: Returns as a Competitive Advantage

Returns optimization is no longer a back-office concern—it is a front-line driver of customer experience, operational efficiency, and profitability. Australian retailers who embrace data-driven, customer-centric returns strategies will not only reduce costs but also build deeper loyalty and resilience in a rapidly evolving market.

At Publicis Sapient, we partner with leading retailers to design and implement returns solutions that balance cost control with customer delight. By unifying data, leveraging AI, and reimagining the returns journey, we help our clients turn a perennial challenge into a source of sustainable growth.

Ready to transform your returns strategy? Connect with our experts to unlock the next chapter of retail innovation.