Should Shoppers Look Forward to Many Happy Returns?
Return policies really do factor into how consumers perceive retailers. Those with liberal policies such as Costco, L.L. Bean, Nordstrom and Trader Joe’s tend to generate the warm and fuzzies from their shoppers while those that are more restrictive are viewed in a different light altogether.
Here’s a personal case in point. On a recent trip to the mall, our 20-year-old was looking at dresses at one of her favorite fast-fashion chain stores. Having found a dress she liked, she wondered if it would "go" with a particular pair of shoes in her closet. She fretted about buying the dress because of the store’s return policy, which offered store credits only. Her decision was to pass on the dress and here, she explained, was her thinking. "I would probably spend the money with them anyway if they gave me a return, but I just don’t like the idea that they are trying to force me into shopping with them." She later purchased a similar garment at another chain with a policy that included a choice between giving a refund or a store credit.
Retailers, it has been well documented, have been on high alert in an attempt to reduce the number of fraudulent returns that cut into their profits. Offering store credits is one way retailers have attempted to hang onto revenues. Another tactic, as a recent Associated Press report points out, is using data to "identify chronic returners and gangs of thieves."
The practice of using third-party providers to create "return profiles" on people has some privacy advocates claiming that retailers are crossing a line that shouldn’t be crossed.
Lisa LaBruno, senior vice president of retail operations at the Retail Industry Leaders Association, said merchants have no choice, considering the billions of dollars lost every year to fraudulent returns.
"It’s not to invade the privacy of legitimate customers at all," Ms. LaBruno was quoted by the AP. "It’s one of many, many, creative solutions out there to help combat a really big problem that affects retailers, honest customers, the entire industry and the public at-large."
- J.C. Penney, Best Buy Customer Data Collection Stirs Privacy Concerns – The Associated Press/The Huffington Post
- Will Change in REI’s Return Policy Affect Its Business? – RetailWire
- The Return of Customer Service – RetailWire
- Is Free Return Shipping for Online Orders Next? – RetailWire
How much of a factor are return policies when it comes to purchasing decisions? Where do you draw the line between customer friendly return policies and fraud prevention?
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18 Comments on "Should Shoppers Look Forward to Many Happy Returns?"
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Well George … I side with your daughter; just check out my RetailWire BrainTrust Query: Can You Say ‘Returns Harassment?’ While Ms. LaBruno claims “It’s not to invade the privacy of legitimate customers at all,” it doesn’t mean that privacy intrusions, blacklistings, data sharing, and data breaches won’t happen with third parties.
I always revert back to Trader Joe’s as an example, which in another recent RW article was noted as being America’s favorite food retailer. They have an extremely liberal return policy and yet they keep growing. That is enough evidence for me that respecting customers and occasionally sucking up unwarranted returns creates enough good will that business can still prosper and grow. Something the Sears and Best Buys of the world never understand—look at how business is for them.
To answer the first question, I will not buy electronics in a CES store due to return policies; it is easier to just buy them at Costco. I do understand some of these policies, but the return fees are too much. Second, as far as I am concerned, if the customer has a valid receipt and returns the item in a reasonable amount of time, okay. No receipt, then the retailer has every right to ask for any and all information before issuing money or store credit.
I think half of it is about the presentation of the policy. I’ve had to sign receipts to acknowledge that I’ve read the restrictive return policy. It made me feel like I was signing a contract instead of just buying some stuff. I felt like if the retailer had that many problems with its policy that it had to make everyone sign off on it, then maybe they needed to rethink the policy.
I feel for the retailers who feel like they’re getting robbed blind, but if you’re making your good customers feel like criminals too, then maybe you need to reconsider the policy. I think this is a pendulum thing—it goes back and forth over time. Retailers should constantly reevaluate.
Return policies are not IMHO a significant factor for most consumers when it comes to purchasing decisions. The more liberal they are, the easier it is for the customer to stay with a retailer, however, the percentage of items needing to be returned is usually very low, especially in grocery. The companies that have tight margins and high dollar items need to be more vigilant and utilize whatever legal measures possible to protect against fraud. Tracking return occasions is less invasive than video cameras following people all around a store and most consumers accept that surveillance.
There is no doubt that loyalty is built through good return policies. I have personally seen it work and consider it a ‘must have’. Having said that, you do have to be aware of abusers, but only to a certain degree—i.e. not maniacal about it.
IMO, the idea of detecting and correcting abuse in returns is best left to the manager of the individual store. No one knows better, or should know better, than the store manager … they’re on the sales floor every day talking to customers.
Believe me, if you’ve ever worked at retail, you know who the people are who take advantage of return policies. And if you’re doing your job, it’s a LOT easier to stop that tiny minority than it is being strict on returns and risking the loyalty of the vast majority of your customers.
Several retailers with online presence actually suggest that if you are unsure between 2 sizes (shoes, pants for example) that you order both sizes and ship back the one that doesn’t work. It is expected that there will be a return. And let’s face it, sometimes when UPS delivers an item it looks/feels totally different than it did on the web page.
If online retailers are going to increasingly participate in this tracking and make returns harder, or more uncomfortable, or more onerous, then I think it is a big mistake. Being able to return what doesn’t work or meet expectations from an online purchase is what makes people willing to take the chance on the purchase in the first place.
The return policy definitely makes me think twice on some purchases. I think a good return policy and return process is a big advantage for retailers with physical locations. This is where online is at a disadvantage for many sites, especially those with a restocking fee.
Policies should be flexible, as people have a variety of needs. I personally don’t buy anything I cannot get my money back for. If a product is faulty, doesn’t fit properly, or I change my mind I don’t want to be hassled. It’s unfortunate a few bad apples spoil the bunch in this case, because retailers and good customers have to pay for fraudulent returns.
George, your daughter has a good sense of what she wants and how to best get it to fit her buying needs. My wife is similar. She avoids buying from any store that has a store credit only unless she regularly shops there. She enjoys shopping where if she makes a mistake in a selection, she has no problem returning it for something else or credit. Isn’t that the way it should be?
The store format and merchandising plays a factor. If it is like consumer electronics, you really should have a receipt for return because of the high fraud factor. Returning something from Traders Joe’s is different, since the cost per item is lower and other than liquor items, I don’t see as much return fraud than a Best Buy or a fashion retailer. It is a matter of expectation setting up front to the consumers on the return policy, on the receipt and branding, and vigilant returns with positive customer service attitude on the return desk.
Easy and simple return policies are part of the customer service strategy for some retailers. A role model for this is Zappos.com, who may have one of the most liberal policies of any company. And it pays off.
Return polices that are difficult are usually because “rules” are set to protect the retailer from a very small percentage of customers who might take advantage of the system. I have no problem with guidelines that are set to protect the retailer, as long as it doesn’t interfere with a positive customer experience.
I’m totally fine with third parties creating and maintaining lists of chronic returners, as well as the lists of people who rather frequently happen to find dead mice in their food and then sue. It protects the retailer, and protects the rest of us from higher prices caused by these idiots. And I’m really fed up with all the “privacy” knee jerk fools who probably think escaped murderers should not be turned in, since, heck, murderers deserve their privacy, too.
I suspect people view return policies in the way they differentiate between a recession and depression; i.e. if THEY can’t return something, the policy is too strict, if it’s someone else, the policy is fine. To be honest, I so seldom encounter restrictive policies—or at least I’m seldom aware of them if they do exist—that I don’t give the issue much thought. So if people are like me, then the answer is “not much of a factor”…until you try to return something and get a nasty surprise.
But ultimately, like much else in retail or life, there is no “right” answer, as it’s a numbers game. Weigh the shrinkage through return abuse vs. lost sales through no/limited return policies…I wouldn’t presume to tell a company where to draw the line.
Return policies are a pulse check on the customer-centicity of the retailer, and a gauge of their profitability. Low profit, non customer-centric retailers focus on squeezing out every possibility of fraud vs. focusing on “what else can we do to delight our customer?” No retailer who sincerely asks that question would consider a restrictive returns policy. Interesting how higher profit retailers are also those with customer friendly policies. Chicken or egg?