Returns Leave Retailers Between Rock and Hard Place
By George Anderson
Customer returns are definitely a pain in the bottom line.
Okay, most returns are legitimate and retailers gladly accept them, but a large number are fraudulent and, based on the most not-so-recent figures from 2002, cost the industry
about $16 billion a year.
Clothing retailers, for example, are often faced with having to determine where the line is between making the customer happy and putting an end to return policy abuses.
According to a Knight Ridders Newspapers’ report, Alta, an upscale boutique in San Jose, Ca., accepted a return of an expensive blouse even though it had its tags removed
and smelled of perfume.
“It was a full-price item, and we had to toss it,” general manager Laura Swenson said. “But what can I do? We can’t clean it and resell it, so it was just a loss to us. Oh boy,
that irritates you when you have to do that. Everyone’s margins are tight.”
Some stores have begun using services that track chronic returners to help decrease the number of items coming back. Some stores have gone so far as to refuse items from customers
they deem to be abusing return policies.
While this may help decrease some instances of fraud, it hardly appears to be an answer when compared to the possible loss of business associated with offending customers who
have legitimate reason for making a return. A survey done by Newgistics and Harris Interactive found 85 percent of consumers said they would shop elsewhere if a retailer made
it difficult to return merchandise.
Moderator’s Comment: How do retailers deal with legitimate concerns about return fraud without alienating good customers? –
George Anderson – Moderator