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Should Retail Companies Offer a Lifetime Warranty?
When offered by a retail company, a lifetime warranty is both a business strategy and a consumer benefit rolled into one, but with its fair share of pros and cons, it has become more controversial than ever.
On the plus side, Thingtesting reveals that lifetime warranties can make a huge impact by “demonstrating to customers that they stand by the quality of their products by offering lifetime warranties and repair schemes.”
In Thingtesting’s interview with Nudie Jeans, Circular Project Manager Kevin Gelsi explains, “Eventually, if you wear a piece long enough, something will break or tear. And we’re there for you. It communicates trust, loyalty and responsibility.”
As a result, “this commitment to keeping its products in circulation for as long as possible has helped Nudie stand out in a market where consumers are demanding more sustainable fashion options.”
From a sustainability perspective, other popular brands have translated the lifetime warranty into repairs that renew customers’ products. For example, “Patagonia has famously embraced the “for life” concept through its “Worn Wear” program, which allows customers to send in used Patagonia products for repair, resale or to be recycled. Patagonia says that it repairs around 40,000 items per year through the program, which launched in 2013.”
Finally, a connection is made between retailers and consumers since “repair and replacement schemes are also a powerful branding tool, giving customers a reason to keep interacting with the brand once a purchase has been made.”
In an extreme example, noted by USA Today, Lands’ End proved just how far they would go to honor their lifetime warranty and satisfy any customer when, “in the 1980s, Lands’ End sold an iconic London cab that was featured on the cover of its holiday catalog for $20,000. When the customer reached out to the retailer 21 years later, saying he wanted to return the taxi, Lands’ End gave him his money back and reclaimed the car — which now sits at the company’s main office in Dodgeville, Wis.”
Lifetime Warranty: The Bad
There are cons to these practices, however, and the first thing that most will notice is that a lifetime warranty usually demands a higher price point for a product upfront. According to USA Today, many retailers have abandoned their lifetime warranty guarantees because people have found ways to cheat and misuse them.
“A small minority of shoppers who have returned items salvaged from yard sales or purchased decades ago to get an upgraded version or a cash refund have left some retailers saying enough is enough,” USA Today reported.
This move by retailers has caused even more harmful repercussions as in the case when “L.L. Bean said that in the wake of increasing abuse, it was putting a cap on its legendary open-ended pledge, limiting most returns to one year.” L. L. Bean’s updated policy gave rise to outrage and “at least one lawsuit” by a customer who believed the business was breaking its promises.
Other companies that have either stopped or capped their warranties include:
- Costco
- Chrysler
- REI
Further still, consumers are warned to research all of the details about any type of warranty. “To be sure, some long-term guarantees may never have been as generous as they initially appeared. Restrictions are often buried in the fine print,” said USA Today.
Lifetime warranties are counterintuitive to the current trend of consumers disposing or donating items after they’ve been used extensively and replacing them with newer, most often improved versions. With the fast fashion industry booming more than ever before, sustainability has taken a hit along with the criticisms of various practices and consequences. This has also forced consumers to reflect on their spending habits and their effect on the planet’s resources.
Discussion Questions
DISCUSSION QUESTIONS: Should retail companies offer lifetime warranties? Are there any creative ways that retailers can still offer lifetime warranties while preventing consumers from abusing the policy?
Poll
Loading …BrainTrust
Lifetime warranties offer consumers a compelling reason to buy, but ‘forever’ is hard to deliver in a fast changing world. As the examples in the article illustrate, lifetime warranties can cause challenges for retailers/brands to live up to the promise. Warranties are still important, and those retailers/brands that have them should promote them, however, instead of lifetime warranties, there is a lot more than can be done to support efforts to enable consumers the right and ability to repair the goods that they already purchased.
Retailers should not offer lifetime guarantees. only manufacturers should (think Chanel, Gucci, Hermes,etc.). The price of a very-well-made product with a lifetime guarantee will. reflect both the quality and the guarantee. Retailers should not have to take on that responsibility unless they are also the manufacturer of the products they guarantee.
A lifetime warranty is a good way to influence consumers’ perception of the quality of products. However, from a retailer perspective, it is not a realistic or profitable strategy. While most customers won’t return goods that they used for a respectable length of time, there are some customers that will abuse the policy. This is evidenced by retailers like L.L. Bean, Costco and others capping their warranty policies to protect their margins.
A real all inclusive lifetime warranty is a tall order. As an (ex) road warrior I stopped buying more expensive luggage with life time warranties, when the once I tried to use it for a broken handle, the answer was ….oh no the lifetime warranty only covers original defects in the product, not wear and tear. And of course, anything that can go wrong with luggage is considered wear and tear.
Perhaps not an unfair answer, but even a lifetime warranty has to have some fine print. I don’t see how any manufacturer can warrant an item forever, so why upset the consumer.
If a company can’t explain its “Lifetime Warranty” in those two words, it should not offer it. Per Peter’s experience, which is quite common, the fine print cancels all the goodwill.
For a retailer who is selling other manufactures’ products the answer is “no”. However, for the retailer who is also the manufacture the answer is very specific to the brand and product. If you are selling higher end cookware, sporting goods products, training products, etc. a life-time warranty can be a very big differentiator. This is especially true if someone is not asking for extra warranty fees as you try and pay, (most annoying and makes you question your decision). Take the case of Orvis; my brother has had his fly-fishing rod replaced / repaired twice by them over the course of 10 years and I guarantee you the loyalty they have built with him has resulted in thousands of dollars of margin in other products.
In addition to the abuse problem that L.L. Bean noted the other challenge with a life-time warranty is execution. It is easy in the digital space with a single return point, but trying to train thousands of store associates how to manage life-time warranties is very challenging.
I think with social media driven “life hacks” it is financially unwise for retailers to sign up for lifetime warranties any more. The waves of claims simply exceeds what is originally planned without some sort of time or frequency limit per customer.
Coming into this story, I expected an example of appliances or maybe furniture; quite honestly I don’t see how this makes much, or any, sense with regard to clothing.
But even in the former cases, my first reaction is that the idea is problematic: in order to be workable it would likely have so many qualifications that it would be more a source of complaints than an attraction.
Yes, lifetime warranties can still be offered by some retail companies, so long as the company understands the true limits of the “lifetime” they are offering. What is the difference between a 20 year warranty on a shirt, and a lifetime warranty? How does this compare to a 10 year or a 5 year warranty? What about a “full product warranty” against defects and workmanship? I would argue that this would be a superior warranty that limits abuse and ensures a high level of customer satisfaction.
There are reasons certain retailers have customers coming back again and again. One of the reasons is the warranty – or guarantee. Regardless if it’s a lifetime warranty or an easy and liberal return policy, it gives customers the confidence they need to know, if it doesn’t work, they will take it back, replace it, etc. We all know returns can be expensive. However, they can also increase sales. Do the math. If the numbers work, you have created a compelling reason for the customer to choose you over a competitor.
Before Sears was owned by someone who fleeced the company, they offered lifetime warranty on their Craftsman line of tools. I believe it was on defects related to manufacturing, but maybe it was more. What I do know is this brand promise created lifetime customers in my grandfather, his brothers, and my dad.
The boldness of lifetime warranties is much less risky when clarity is obvious in what it covers, and what it won’t. The duress of normal wear and evidence of abuse should be clearly stated.
When deciding whether to offer lifetime warranties, it is crucial to consider how customers will use a specific product and ensure that they do not misuse it. Patagonia has a very niche customer base that values its products, so even if the prices are very high for its products, a lifetime warranty will make sense here.
Generally, the retailers who offer lifetime warranties, charge a hefty price for their products. This way, the retailer’s short-term goals are met and no matter how many times a customer claims warranty, it’ll still be economically viable than the original price of the product. Consequently, lifetime warranties are of no use for low-end products which have a very short shelf life.
Lifetime warranties will be more suitable for luxury items like jewelry or other specialty items that customers keep with themselves for a longer period of time.