Returns Season Starts
By Tom Ryan
According to
a survey of retailers by the National Retail Federation, 6.4 percent of
holiday returns are expected to be fraudulent this year. At the same time,
numerous articles in the general media this past weekend warned consumers
about over-stringent return policies.
According to
the NRF, returns are expected to cost the retail industry an estimated
$2.7 billion this holiday season and $9.6 billion this year. According
to the survey of 134 retailers, 69 percent have changed their company’s
return policy to combat fraud, 16.9 percent tightened their policies, and
3.8 percent relaxed theirs. About one-third (28 percent) said their return
policy is more flexible during the holidays than it is during the course
of the year.
Among the issues
driving fraud, 93.1 percent of retailers said stolen merchandise has been
returned to their stores in the past year, 75.4 percent have experienced
returns of merchandise purchased with fraudulent or stolen tender, and
43.1 percent have experienced returns using counterfeit receipts. Nearly
half (46.2 percent) also report that wardrobing — the return of used,
non-defective merchandise like special occasion apparel and certain electronics
— has been an issue for their company within the past year.
Meanwhile, The
Denver Post notes that some stores are easing up on what consumers
can and cannot bring back and when. Best Buy extended its holiday return
policy by a couple weeks but computers are still the standard 14-day
return policy. Target is accepting returns without a receipt, limited
to $70 in a year.
But Edgar Dworsky,
founder of the internet resource site Consumer World, which makes an annual
review of stores’ holiday return policies, said consumers should be wary
about return policies on different items. Some stores and websites charge
restocking fees from 15 percent some places to as high as 60 percent for
used or late returns at overstock.com.
Here, some other
noted return policies:
- Wal-Mart
has a 90-day return policy on most items; 15 days on PCs, GPS; 30 days
on cameras; 45 days on PC accessories. Days counted begin Dec. 26. - Amazon
has supplemented its regular return policy with 29 different product-specific
return policies, including restocking fees up to 20 percent depending on
the item. It generally gives customers until Jan. 31 to return items purchased
between Nov. 1 and Dec. 31. - Macy’s
allows returns with or without receipt within 180 days from purchase. It
includes a 10 percent restocking fee on furniture and mattresses. - Sears
enables a 120 days on most items, 60 days for electronics, software and
beds; 15 percent restock fee on electronics with missing items. - Items
bought on Home Depot online cannot be returned to stores and customer pays
shipping. - At
JC Penney, items can be brought back without a receipt within 90 days, but
the amount of the refund will be based on the lowest on-sale price within
the last 30 days and issued as a store credit. - Staples
has no deadline on office supplies; Jan. 9 for electronics and furniture. - Bed
Bath & Beyond and Kohl’s both have no time limit for either in-store
or online returns as long as you have a receipt.
Discussion
questions: Are most retailers’ return policies too strict or too lenient?
In which aspects around returns (days before return, opened/used items,
restocking fees, no receipt, store credit only, etc.) are stores likely overly-strict?
In which areas are they likely too lenient?
- Retailers Find
Balance as Return Policies Assist Honest Shoppers, Fight Fraud – National
Retail Federation - Returning a
gift? Stores tweak policies to reduce fraud – St. Louis Post
Dispatch - Stores may ease
return policies – The Denver Post - The best and
worst return policies of the holiday season – Walletpop.com
I believe that most retailers are pretty fair when it comes to their returns policy. Let’s face it; a 14-day return policy should be sufficient to allow consumers to make their proper decision. Sure, there are some retailers who still don’t get it. Home Depot not allowing returns from online sales to the stores is a huge mistake. If Home Depot were smart, they would encourage consumers to return in stores. This would provide them with a better chance to purchase a new, replacement item, and spend all of their refund money at Home Depot.
But all in all, most retailers seem to be pretty smart with respect to their return policies, and should be commended for the focus on the customer.
No legitimate customer should be deprived from returning an unwanted or unacceptable item. Generally, most retailers want to honor that process and they do. But there are some people who want to scam the system and they should be stonewalled.
Retailers are continually trying to find the balance between legitimate returns and others. That process will continue because retailers really want to be fair to their customers, which I believe they are. But the cheats will continue to be aggressive and creative in trying to scam retailers. And so the beat goes on.
I think most policies are reasonable. But a lot of retailers have to work on execution. The more people handling returns the less frustrating it is for the shopper and the more likely they are to spend that money in the store–and maybe more.
If anything, larger retailers are setting the tone for refunds and they are providing very lenient policies for customers. Considering the amount of fraud and theft going on, it’s amazing to me that any retailer would take a refund without a receipt.
Immense kudos to Costco for having possibly the most liberal and customer friendly return policy. I also want to point out that they do an excellent job of educating the customer on their policies. POP is clear and concise (especially around electronics and computers) and customer service staff know their policies inside and out. Being able to track purchases on the membership card is a huge bonus for customers that lose their receipt.
Small merchants need to look at how they handle returns if they want to develop a stronger connection with their customer (see article here). While the average is 15 days and only exchange on defective, some more progressive merchants are going 30 and 60 days to compete with their big-box counterparts.
It’s not whether or not the policy is logical, it’s how the policy is executed that matters. Most posted policies are reasonable and the experience of returns in most stores is like crawling over a mile of broken glass. Will fraud increase? Of course; the economy is terrible. But, the question retailers have to wrestle with is how to balance that reality against the need to build and retain customer loyalty.
A lenient return policy can be the linchpin of an overall “no hassle” marketing strategy and in fact, some of the stores mentioned in the article have taken advantage of it. Yes, there are costs involved in allowing customers to take advantage of liberal return policies but they should be more than outweighed by overall “brand equity” as a result. Stores do need to be careful that “no hassle” applies to the return process, not just the policy.
I am a big critic of Best Buy’s return policy on computers. The difference between Best Buy and Costco is very dramatic. First, I have to say that I have only had to return a computer once and I bought it from Costco and there was no problem. I had just had the Geek Squad out to diagnose my old PC’s problem and was considering Best Buy until I was alerted to their return policy of 14 days and a 15% restocking fee. After buying my new computer at Costco, I wrote to Best Buy telling them of my decision and why. (I’m also a stockholder of BB) Four days later, a customer service person wrote an informal reply saying he would be sure that senior management learned of my displeasure. I couldn’t stand it and again stated my disapproval and again received the stock answer “Thanks for your letting us know, have a nice day.”
At the holidays the return policy needs to begin Dec. 26th regardless of when people purchase the item; otherwise gift giving is a real problem. Target’s and Home Depot’s scanner system can at least determine whether the product is something they carry or not–granting a return for a product the company does not carry would not make sense. Target can tell whether you purchased it on a credit card to determine whether the return is legitimate. However, determining whether a product was purchased by that retailer when someone paid cash or when someone gave it as a gift is problematic.
The fairest policy to me seems to be to return it for cash credit in the store but not for cash when it is a gift or someone does not have a receipt. I really don’t know how a retailer can determine whether the product was legitimately purchased for cash or given as a gift. It is a problem all year, but significantly worse at the holidays.
A while back, I witnessed a grown man cursing out a twenty-something-year-old store associate at a Walmart customer service counter in front of his embarrassed, young children. He thought that Walmart should take back a video game that had been opened and played and before it was all over, he ran through two associates and a manager, all of whom were completely professional and patient, even as the customer got more and more abusive. After the customer stormed out, I asked one of the associates if incidences like that were common. She replied, “Oh yeah. Last week, someone threw a box at me. Luckily, I ducked fast enough.”
Walmart doesn’t get enough credit for its generous, and usually quite efficient, return policies and yet they still endure the wrath of the entitled and remorseful. Walmart’s odd-until-you-get-used-to-it return process – having the front door greeter scan and tag all items to be returned before customers hit the service desk – might be worth emulating, but with an additional step: have the greeters look at the receipt and items and explain the return policies BEFORE the customer ventures further into the store. Particularly effective the Walmart way, since many greeters are senior citizens (so, you’re ready to curse out a nice old lady?). If they question the information and want to move on to the service desk, have the greeter notify that a potentially disgruntled customer is heading that way and have a manager at the ready. Retail returns shouldn’t have to be contact sport!
While for the most part return policies are reasonable, there are always exceptions. And rather than single out a retailer, the issue of return policies is yet another area that underscores the value of customer data beyond marketing purposes.
By tracking what customers actually buy, retailers are much better able to identify and accommodate returns, even for gifts from those customers. While this gets into thorny issues (e.g., “what, my gift was returned?” or “that’s all they spent?!?!”), in the end it’s a better customer experience and a better way to combat fraud for a retailer.
Phil, I agree to a point, we need to look at the larger idea of “gifting” during the Holiday season. Although CRM and ECRM programs are effective at looking at the purchase behavior of the individual, when a gift is given and the loss of a “receipt” for a legitimate purchase comes into play, it is a HUGE challenge, even for in-store exchange.
We had an issue in our family where were we not given a gift receipt and copied the receipt thinking that it would be acceptable at Target…it was not!
Much like the airlines, there is a general lack of consistency.
Phil makes a good point. Returns take on added dimensions during the holiday season. With that in mind, merchants could do a better job–and help build some loyalty year round–by differentiating between their best and regular customers vs. those who shop infrequently. Specifically, merchants should use loyalty/reward programs and other solutions to recognize their best customers and reward them with no-hassle or more simple returns. At stores where I’m a frequent shopper and recognized by name by associates, my occasional returns normally go off without a hitch. That same type of loyalty and reward should be formalized by merchants for their customers.
The majority of retailers offer a fair return policy. It is the abusers of the policy who make it difficult for everyone involved. At the end of the day, only the consumer will lose, since the retailers pass on the costs of returns to their customers. Great companies have built their reputation on returns and NOT asking any questions (e.g. Nordstrom, who stipulated that there were only 2 rules to follow: 1 – The customer is always right, 2 – If you have any questions, see rule #1). The better the return policy, the more loyal the consumer, and the better the return on business for the retailer.
Most retailers offer a fair return policy per their products. The challenge with return seasons is that many people working in stores view it as just that, rather than exchange season or what it should really be known as “Mega Traffic” season.
Retailers and in-store associates need to look at the opportunity that is in front of them with the high level of traffic. When I was a District Manager about 100 years ago, there was a best practice to assign one register as a “return” register. I quickly killed that off and made sure that everyone knew their job was to get exchanges or increased sales as a result of the huge traffic spike. It worked and it continues to work in stores that understand the opportunity and have a plan to capture it.