Re-Inventing Retail

From the Co-Founders of The Retail Owners Institute.
Tips | Tactics | Insights on the Business of Retailing.

Oh Those Returns Policies Bookmark

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We read recently of a service that enables retailers to essentially outsource their decision-making regarding refunds and customer returns.  Yes, to an algorithm.

Used especially by large national chains, it applies technology to accept or reject attempted returns.

Have questions about your return being denied? The store employee directs you to contact the return authorization service. 

Well, that's one way to handle returns, isn't it? And it may be very appropriate for large national chains that are particularly susceptible to fraud or so-called "returnaholics."

But for local retailers, return policies are one of the most complex management issues in retailing.

Too restrictive a policy, and customers are offended or driven away.

Too lenient, and some customers will abuse it (raising costs for everyone.)

And in either case, the retailer is left holding the bag (no pun intended.) What to do with the returned merchandise? Whether apparel, soft goods or hard goods... 

Can it be re-ticketed and go back to the sales floor?  (Is it still in season?)

Or to the clearance rack/open box area?

Or directly to a charity?

Or, sigh, written off and discarded?

Often, in our quest to thwart abuses, we may create too many hurdles for the trustworthy shopper.

Make it too burdensome to shop with you and make legitimate returns, and those shoppers may go elsewhere.

Or those items that they aren't really sure about purchasing? They'll just pass on them, rather than taking the chance, then being disappointed, and feeling that they are "stuck" with a bad purchase.

And no matter what the spirit of your stated returns policy, the implementation of it at the point of sale demands well-trained employees with outstanding communication skills.  

The very people we'd rather have on the sales floor, not dealing with returns!

Scenario for Your Next Staff Meeting?
We have no magic answers, alas. But we do have some thoughts about involving not just your staff, but maybe even your customers, in helping to resolve some of the dilemmas. Consider this:

That Shopper shows up with an item purchased several months ago, and asks for a refund of the original price. The item appears to have been worn/used ever-so-slightly.

You recognize that the item is destined for the clearance rack (at best) and/or the local charity (most likely) if not the discard pile.
Do you:

  1. Provide the full refund, enthusiastically point out the new merchandise you have just received, and hope That Shopper will purchase something else from you?
  2. Point out the fine print of your written and posted Returns Policy, and apologetically but firmly apply the policy and reject the return?
  3. Explain to That Shopper that you are not able to resell the item and have no choice but to give it to charity or just discard it; Would That Shopper prefer to NOT return the item, and instead make that donation (for a tax deduction?) personally?
  4. It depends. 

We know; choice #4 is the usual – and realistic – response. 

But consider the logic behind choice #3: 

It is not enough to have a printed and posted Returns Policy. Especially in today's competitive environment, customers want to understand "Why?" 

Might there be opportunities to incorporate more explanations of Why into your stated policies?

And/or, to involve the customer in helping to arrive at the decision of what to do?

Ahh yes; return policies. One of the most complex management issues in retailing, don't you agree?

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About The Co-Founders

Pat Johnson and Dick Outcalt, The Co-Founders of The Retail Owners Institute®, have been called "The Zen masters of retail finance!"

Since 1999, they have been assembling  their proprietary content into a unique self-help website. The Retail Owners Institute is an unmatched resource that assists retailers worldwide with basic financial training, assistance and easy-to-use tools.

Their engaging and empowering how-to resources about the financial levers in retailing are informative, fun(!), and retailer-friendly. Their promise: "Everyone will 'get it'!"

Pat and Dick are recognized experts in strategic retailing. Working only as a team – Outcalt & Johnson: Retail Strategists, LLC – they have been consulting, publishing, and speaking professionally throughout North America since 1990.

They focus exclusively on retail, or wherever retail is involved. They work with CEOs, CFOs, boards and owners of retail operations, as well as manufacturers or wholesalers expanding into retail. And they also are Retail Turnaround Experts.

Since 1999, empowering retailers and store owners to "Turn on your financial headlights!"