Should Shoppers Look Forward to Many Happy Returns?

Aug 13, 2013

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."

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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Ken Lonyai

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.

Frank Riso

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.

Steve Montgomery

The value of a liberal return policy depends on what is being purchased and who is doing the purchasing. Some people know when they make a purchase and fully expect they will be keeping it. For them the return policy may be a consideration, but a small one.

Others know that they need to see it in their home, with other items of clothing they own, etc., and may find that they need to return it. For these buyers the return policy is important.

There is another group. Customers who simply cannot make up their mind between this and that. We have a friend who falls into this category. Her intent is not to defraud or abuse the retailer’s return policy. For her the return policy is critical.

These are far different from the person who buys an item, wears or uses it and then returns it to the store for credit. For these buyers the stores return policy is the reason they shopped at that particular retailer. These are not customers, but scammers who are taking advantage of the retailer’s policies. Those who fall in this last group deserve to be prohibited from making returns, period.

Nikki Baird

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.

J. Peter Deeb

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.

Lee Peterson

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.

Li McClelland
Li McClelland
4 years 2 months ago

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.

Larry Negrich

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.

David Zahn
This past weekend, I was helping a friend move into a new home. So, we shuffled off to the local Lowe’s to purchase all kinds of things needed for a new house. The first priority was to cut window shades to prevent neighbors from seeing directly into the home (especially bedrooms and bathroom) and block light out to allow for sleeping. The homeowner asked for Levelor shades to be custom cut to fit the window dimensions she had measured prior to the trip to the store. Well, she mis-measured and the shades were not the right size. No problem—the store took it back without question and provided a cash refund. Secondly, she was in the market for a lawn mower. After looking at the various units available, she was still hedging as to which one to purchase. The sales associate told her that she should buy one and take it home and use it. If she did not like it, she could return it. She explained that it would be full of grass cuttings and would no longer be able to be sold as “new” to anyone else. The sales associate said with a laugh, “we get people who return… Read more »
Lee Kent
Here’s how I feel about it. Now I’m gonna tell you a hotel story and it’s not about returns. Hmmm, you are saying, right? This story goes to Nikki’s point that it’s about how the policy is presented. I checked into a boutique hotel in NY last year for NRF. I was then informed that i would be charged $50 a night every night for the mini bar. If I didn’t take anything out of the mini bar then the money would be refunded. What?!!! This, they said, was to protect them from theft. I asked if all of their customers were ex-cons. Really, I did. At any rate, the bottom line is that they treated me like a criminal before i even stayed a single night and with no apologies. So what did I do? I left them a scathing comment card which I mailed in instead of leaving in the room and then blasted them on every public forum I participate in. I would name names here too, but I know and respect the golden rules of RW. How much damage did I do? Maybe not much except with my own friends and family but, you never know.… Read more »
Zel Bianco

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.

Ed Rosenbaum

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?

Kenneth Leung

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.

Shep Hyken

Easy and simple return policies are part of the customer service strategy for some retailers. A role model for this is, 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.

Warren Thayer

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.

Craig Sundstrom

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.

Mike Osorio
Mike Osorio
4 years 2 months ago

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?

Alexander Rink
4 years 2 months ago
As with all things, it is most likely dependent on the situation/product. For low consideration/low cost items, a good return policy is probably not necessary. For example, dollar stores most likely would not lose many customers for refusing to accept returns. For higher ticket, or more complex purchases, however, I believe the retailer will profit more in the long run from having a good/flexible return policy. Retailers need to consider customer life time value, and having a good return policy is certainly one way to increase loyalty and positive sentiment. I would like to think that most shoppers are reasonable enough to understand “rules” with returns (i.e. tags still on, within a reasonable amount of time based on that product’s life cycle, with receipt and so on. I think a “no questions asked” return policy actually helps the retailer increase sales. Costco, for example, is renowned for having shoppers buy more than they had intended, and I believe that is a product of their carrying items that one might not find every day, at attractive prices, and with a liberal return policy so that the shopper knows they can return it if they do not want it. I can personally… Read more »

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