The responses of retailers to customers who return frequently or in large volumes vary widely. Some continue to embrace the popular mantra that “the customer always right” and accept virtually every return. But increasing numbers of them are imposing limits on returns, or even banning those customers who exceed the limits.
In some cases, the rules are communicated in the retailer’s published policies. For example, Saks notes, “To ensure a positive shopping experience for all our customers, if we identify through electronic analysis an unreasonable return pattern, we may restrict or refuse future transactions from such customers at Saks Fifth Avenue or at saks.com,” and Best Buy cautions consumers, “Based on return/exchange patterns, some customers will be warned that subsequent returns and exchanges will not be eligible for returns or exchanges for 90 days.”
Other retailers do not offer any published warning or establish standardized responses but still impose limitations and bans in practice. Target does not cite the potential for banning customers, but anecdotal evidence, shared by various customers, reveals situations in which people have been told they cannot return items for time periods ranging from 90 days to a year to forever. Reports also indicate that Victoria’s Secret, Home Depot, and Lowe’s will limit returns and that Amazon, HSN, and QVC are prepared to issue lifetime bans to customers who return too many previously delivered items.
Whether the policies are communicated or implicit though, there is no clear algorithm or threshold for how many returns are too many. Thus some good customers complain that in extraordinary circumstances, they were forced to make multiple returns, in good faith, so the retailer’s lack of understanding when it imposed a ban on them left them frustrated and angry. For example, one high-tech consumer returned three televisions to Best Buy when each set suffered from dead pixels. The result of his search for a properly functioning television was a 90-day ban on making any returns to Best Buy. The concern for retailers is that good consumers will simply stop buying from their stores if they lose the confidence provided by a helpful return policy.
Yet the concern on the flipside might be even more threatening. Retailers continue to suffer from fraud perpetuated by consumers who “borrow” items by purchasing and using them, then seek to return items. The practice is particularly prevalent for formal wear; many clothing retailers tell stories of party dresses returned with stains or strong food smells. But it also hits electronics retailers, such as when fans pick up a new smart television before the Super Bowl and return it the following Monday. The high costs of such fraud include restocking costs, as well as losses when the returned items cannot be sold as new. In addition, for retailers that provide delivery of purchases, such as Amazon, excessive returns increase shipping charges by at least double, if they pay both to send and receive the item.
Discussion Questions:
- What are some retailers doing about chronic returners?
- Using the Customer Pyramid in Chapter 11, in what segment do these customers reside? According to the guidelines prescribed by the pyramid, are these retailers doing the right thing?
Source: Tom Ryan, Retail Wire, August 12, 2014