Will Change in REI’s Return Policy Affect Its Business?
You know, there are some people who, given an inch, will take a mile. According to REI, an increasing percentage of its customers fit that description and that’s why the company’s 100 percent satisfaction guarantee pledge has gone from having no time limits to being capped at one year.
"We saw a big disproportionate spike in products more than a year old being returned," Tim Spangler, senior vice president of retail for REI, told The Denver Post. "It’s not a big surprise to get returns more than a year old. But it was the fastest growing sector of returns for us. What we found were some legitimate returns in that group. But we saw a growing number of folks who appeared to be stretching the policy."
As a Seattle Times report made clear, the outdoors retailer has become known as "Rental Equipment Inc." as people have taken unfair advantage of its policy, including a mother who returned a stroller because her kids had gotten too big and a man who brought back a bike rack because it didn’t match his new car.
Discussion Questions
Will REI see any change — good or bad — come from limiting returns to a year from the date of purchase? Is this something that others with generous return policies (Nordstrom, L.L.Bean, etc.) will need to do, as well?
I think it is a good thing. Millennials in particularly are smart at using liberal discounts and return policies. With social media and aggressive blogs searching out the hidden ways to get your way, it was only a matter of time.
Returns are still the dirty secret online retailers rarely share data on, but their liberal return policies are suspect as well to how they affect the bottom line.
Fool me once, shame on you, fool me twice or in this case years later, shame on me. REI’s policy might have been a selling point, but based on the stores quoted in the articles, it would appear some people were taking unfair advantage of the previous policy. I expect to see little to no change in sales, but a significant drop in the cost of returns.
This is a tricky one, but I’m not in love with REI’s overt change in policy.
REI still has a very generous return policy (well ahead of most of their competitors), but it’s just really bad optics of be making news for a tightening of your return policy.
Nordstrom, Costco, L.L.Bean, and REI have always earned great loyalty and word of mouth around their customer service policies, that have essentially eliminated any risk of buyer’s remorse on the part of the shopper. Although this new policy won’t likely effect any earnest customers, it does introduce seeds of doubt along the lines of “will it be be a hassle, if I have a return?” to many shoppers.
I would have rather seen REI address their abuses through more aggressive fraud dedication. There are many tools at REI’s disposal such as limiting returns for non-members, and then using member number to track serial return abusers, etc…
A one year return policy is still quite liberal, especially given the nature of the merchandise. It’s likely that all but a few having a problem with this change would be the abusers or “renters” in their clientele. It’s ultimately good for the company, but probably will have little impact on its bottom line.
There’s still a huge gap in consumer policies from retailers like REI or Trader Joe’s to those like Sears or Best Buy, so any retailer on the REI policy side likely can make incremental changes without offending customers.
Every company needs to examine its return policy to see if it is negatively impacting bottom line results. Enough customers abused REI’s policy that a change was needed. A year seems like the right amount of time, especially if REI continues to offer quality gear, knowledgable salespeople and a commitment to excellent customer service.
People definitely abuse generous return policies. But that’s also why people shop with these stores: the freedom of not having to worry. A policy cap of a year is still pretty generous. Reasonable people won’t have a problem with this. And REI should still abide by the common sense rule that specific issues should be dealt with on a case by case basis.
As the economy changed, people changed. They began to take advantage of any channel that could save them money. And as the social world changed and life moved online vs face-to-face you found more people sharing the ways that they save money or take advantage of retailers and services.
So, for the true REI shopper, all will be fine. The “take advantage of nice people” group will move on to find its next victim.
Tom…REI Member/Shareholder….
I doubt there will any impact to REI sales with this change to their return policy. Moving to a one year return policy is still generous, and will satisfy REI’s loyal customers. My guess is that REI will always do the right thing for a loyal customer, no matter what the return policy states.
Unfortunately, there will always be customers that want to take unfair advantage of retailers. This is a cost of business, and shouldn’t prevent return policies that protect retailer’s customers.
As the public seems bent on ridding themselves of any sense of honor, responsibility and pride, this is not surprising. Historically, other retailers have had generous return policies. Walmart, Sears, Penney’s, etc. have all been victimized.
If it were me I would restrict all returns to 30 days and then only if the product was defective. The people who perpetuate this and other scams harm all of us in that we have to pay higher prices for what we buy because of their theft.
I’m one of the “Trail Angels” along the Appalachian Trail, helping thru-hikers with meals, places to stay, errands, etc. I frequently drive them to REI, which has tremendous loyalty among the hikers. (They have mild contempt for L.L.Bean).
Most returns/exchanges at REI are appropriate. But I have to say that sometimes store associates at REI are so eager to be helpful that they go overboard. Case in point, one guy had a broken hiking pole (after about 1,000 miles) and went for an exchange. The store associate quickly gave him a replacement, and then threw in another pole for free, since she didn’t want the guy hiking with one old and one new pole. I think there was some flirtation going on at the same time, but better checks and balances on store associates at REI might be in order. I think the new policy is wise. And IMHO, Steve Montgomery has it exactly right.
A one year time limit on a return policy is more than generous. Other retailers with liberal return policies should do as REI did and examine what is happening to them. They might be sadly surprised.
REI’s great reputation is not limited to its return policy. As others have said, one year is still generous. It could work out that the PR associated with the change will make prospective customers aware of a policy that is very attractive and bring them right into the store or website.
As an REI member (it’s a co-op) I’m pleased with this move. One year regardless of condition is still very generous and I’m glad they are cutting off people who were abusing the policy so that those resources can be better deployed to benefit all members.
It’s unfortunate that consumers take advantage of a retailer’s goodwill to the point that they have to change their policies. What consumers don’t realize is ultimately they lose because these great benefits have to be scaled down.
REI’s hand was forced and a one-year return policy seems more than fair. Pulls away some benefit for consumers, but I do not believe it will hurt their business long term.
One out of the box idea is to create a customer return panel made up of 50-100 loyal customers from around the US. If a questionable return comes in, the store can post the return on the Customer Return Panel (CRP) site for approval. This does two things 1) If the return is legitimate the customer will have no issue posting the return request to the panel so it will slow down ridiculous returns like the stroller and bike rack. 2) Consumers value the benefits of a store they love. If a fellow shopper is taking advantage of the benefits I can assure you they will reject the return. This is why our legal system works so well. Judged by your peers.
Members of the panel would rotate every 12 months. They would receive a small reward for their service. Maybe a $200 gift card after their term is up and they have participated in at least 100 return reviews. Maybe they have the ability to nominate someone to fill their seat.
Returns are the silent killer of retail. They eat at margins and comps and are a poor excuse for customer service. For sure there are people who abuse the system, but I think that retailers should do a little self-analysis and ask why return policies are so important to their customers. Why do their customers need to take products home before making their final buying decisions?
Online retailers definitely need a liberal return policy because it’s difficult to make a final buying decision before touching or trying-on the product. Brick and mortar returns, however, are another story.
When customers make the trip, retailers should have all the information available through their associates to enable the customer to make their final buying decision in the store. Technology enabled, knowledgeable service is the only way to help customers get the information they need to make an in-store buying decision that sticks.
Anecdotal folklore notwithstanding, I’m sure one would find that Nordstrom already has limitations on returns (however timid they might be). And every retailer should, for the reasons made obvvious in the article. That having been said, REI’s policy seems to miss the mark, narrowly focusing on time-frames, but ignoring the real problem: fraud (or in some cases, behavior that is so clueless it might as well be fraud); what about defects that take 18 months to manifest themselves? Does the one year policy cover these as well? And I also expect we will see the pernicious effect of social media with this, as every pampered dimwit who has ever returned anything will take to the twitterverse. My only question is, will “How does REI limit the damage from Social Media fallout” appear this month, or will it be in July?
REI is an outstanding company. Love their stores and their philosophy. I believe that REI will stand behind a product, regardless of the length of time. Capping the return at a year is still very liberal. However, I bet that the customer service savvy company will delicately handle legitimate problems well after that year. I know. It’s just a feeling. However, that feeling is based on my in-store and online experience with them.
About 40 years ago the major food company I worked for eliminated their “no questions asked satisfaction guarantee” because the VP over the box candy division was concerned about fraudulent returns of $5 boxes of chocolates. The truth is that the total “suspect” returns for that division was less than $1,000 a year.