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Re-Inventing Retail

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

...And many happy returns Bookmark

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How important is it to have - and brag about - a “free and easy” return policy? 

That is an issue that vexes many retailers. 

Processing and handling returns can be costly and time-consuming. 

But, there also are "costs" associated with more restrictive return policies. 

A two-year study comparing return policies of two similar retailers offers some new insights. 

But first, some (reassuring) background. 

Apparently 48% of shoppers say that their top reason for choosing a retailer is a flexible returns policy. 

However, according to a 2016 Holiday Shopping Trends survey from the National Retail Federation, “On average, two-thirds of consumers say that they didn’t return any of their gifts.”

But, as is often the case, perception is everything! Apparently the availability of an easy returns policy is good enough for most customers.

So, how important is it to have a “free and easy” return policy? Here's how a study by Washington & Lee University examined that issue. It compared two similar online retailers:

– one offered free shipping on returns

– the other required the customer to pay shipping costs to return items.


What happened? Over a two-year period, average spending per customer was four times greater ($2,500 versus $620) for the retailer offering “free and easy” returns!

Wow! That's impressive, isn't it?


Lessons for ALL Retailers

We believe the lessons from this apply to brick-and-mortar retailers as well. 

What about your store's return policy? How is it perceived? Does it seem “free and easy”, or is it restrictive? 

If you require that items must be returned within a very short window of time, or can only be returned for “store credit”, you may be protecting yourself from being “ripped off”.

But you also may be assuring yourself of missing out on future sales.

Bigger yet, customers that do trust you as a retailer are very likely to shop with you more frequently. And they tell others!


Are there costs? Of course! 

Some customers will abuse it. 

Some merchandise will not be able to be returned to your shelves. (For that, consider Ebay or Amazon for liquidating it yourself, or use some of the so-called “return services” to recoup costs.)


But consider the cost/benefit comparison. What does a “free and easy” return policy really do? 

It builds confidence and trust with your customer. 

It keeps them coming back, and spending more! ($2,500 vs $620, remember?) 


Maybe most important of all: if you have a no-hassle returns policy, be sure to merchandise it! 

"If you've got it, flaunt it!"


Hmm. Maybe it’s time to quit focusing on returned merchandise. Concentrate instead on those “returning customers!” 

And do whatever it takes to have many happy CUSTOMER returns!



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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!"