The Retail Industry is in Dire Need of a Chief Returns Officer in Its Ranks
In the fast-paced world of retail, ‘change’ in operations is usually driven by external factors — be it consumers pushing for faster delivery or regulations demanding sourcing diversification. While these changes help the company stay in business, they also lead to uneven growth across verticals, as independent departments make decisions that benefit their segment, thanks to systems operating in siloes.
This explains why forward fulfillment operations almost always tend to be technologically more sophisticated than returns management in retail. This is because companies are driven by the belief that more sales lead to more profit. While this statement would be true in an ideal world, it does not hold in today’s reality, where there is an unmistakable trend of rising returns by consumers so accustomed to zero-consequence returns.
In returns management, there is an added layer of complexity, as it is a segment that organizational units look to sideline, hyper-conscious of accepting blame for a lost sale. With retailers often not privy to the exact reasons for a return, it’s anyone’s guess, making it easier for units to pass the ball along.
For instance, a return that is sent back to inventory may have issues with product quality, be damaged in transit due to improper packaging, or have misleading descriptions on the site. Each of these reasons is valid and points to different departments within the organization, but without centralized control over how returns are accepted and processed, retailers make little to no progress in stemming returns at their source.
Building Change by Assigning Responsibility
This creates a situation ripe for change — and change can seldom happen without someone recognizing the problem and taking responsibility to address it. Enter the role of a Chief Returns Officer (CREO) — a senior leadership position that has the authority and visibility to drive real change in how returns are perceived and processed within the organization. Considering returns affects everything from the website to warehouse operations to finances, a CREO has a vantage point from where they can impact returns intelligence, customer trust, and profitability all at once.
While reducing overall returns is an obvious objective as a CREO, they would need to fix a few KPIs that would lead to the favored outcome. From a financial perspective, examining the average cost per return and how it can be reduced is a critical metric. This would include probing into the numbers behind return shipping and handling costs and the average time returns sit in the warehouse before they are processed and resold.
Operationally, a crucial metric would be to measure the efficiency of the return merchandise authorization (RMA) processed per hour, per day, or per facility. This could be drilled down to the associate level to understand productivity and identify bottlenecks.
While these metrics help measure the backend of returns management, tracking the time to refund is critical to keeping customers engaged beyond the returns process. The rule of thumb is that the faster customers get their money back, the more likely they are to buy from the brand again.
Retailers can squeeze in the possibility of ‘exchange’ when customers reach out for returns — if persuasion can lead customers to swap for a different size, color, or product instead of a refund, the brand ends up protecting its revenue and customer loyalty.
Making Returns Data Work Upstream – Not Just Downstream
Once the foundations of returns management are laid, the CREO can organize returns data to forecast return volumes based on historical patterns. In a fast-moving market vertical like retail, where new products or seasonal items keep being added to inventory, returns forecasting can help the brand understand the volume of returns to expect after a new launch. For instance, if a category is expected to have a 10% return rate, the inventory volume can be rationalized accordingly, since returns can replenish depleting stock.
Beyond regular operations, the CREO will also be responsible for driving meaningful change in the top management’s perspective on returns. A considerable number of CFOs today continue to see returns as simply a cost of doing business. “You sell products, you get returns — it’s a headache, but it’s expected,” is a commonly heard notion. But what’s often missing is a broader view of how returns affect multiple parts of the business.
This myopic view can hinder the potential to leverage returns as a strategic advantage, as companies may be skeptical of investing in return management technology. For a CREO, combating perspectives can come later — initially, it is about establishing control and visibility in existing processes, which directly affects how quickly the system processes returns, recovers inventory, and puts it back in circulation.
Once the foundations are laid, the CREO’s role begins to mature and become more strategic. With adequate technology, it becomes easier to dig deeper into return data, fraud prevention, and cross-functional insights, such as ‘are we spotting early warning signs when a new product launches?’ and ‘are we feeding that data back to design, manufacturing, or marketing fast enough to make a difference?’
Over time, success is about compressing that entire feedback loop — turning returns intelligence into actionable business decisions faster. It also means shifting the company mindset. When the brand’s sales go up, and the return rate goes down, that’s a clear signal that the system is working.
In other words, early success is about control and speed. Long-term success is about insight and transformation. And a motivated CREO can make all the difference.
