From a recent RetailWire discussion, I comment on L.L.Bean’s consideration of a less liberal return policy than it has always been known for:
Having worked for Kohl’s for 24 years, I have a bias toward more forgiving return policies. Kohl’s always viewed its return policies as a competitive advantage and marketing practice (even though there was plenty of gnashing of teeth among the merchant ranks) and I believe this is still the case. Stores can maintain this kind of trust with their customers, even if they look at tweaking the policy through issuance of gift cards for goods returned without receipts or after some time has passed.
I’d be very careful if I were L.L.Bean to walk away from part of what has defined its brand for a long time. As another panelist suggests, look for other reasons why costs are rising faster than sales, starting with merchandise assortments.
From a recent RetailWire study of stores’ return policies:
More than a tool to drive sales or margins, a store’s return policy should be considered a marketing tool. It may seem counterintuitive that the most lenient policies are most helpful to a retailer’s results, but those policies really represent a key trust-building tool with customers and a way to build consumer loyalty over the long haul.
My experience at Kohl’s — which has always had lenient policies in place — reinforces my perception. Individual buyers may have cringed (the customer returning a watch for credit that he ran over with his truck), but the big picture told a key story about the brand.
One caveat: Stores with liberal return policies are now grappling with the amount of online-only purchases being returned to brick-and-mortar stores. While this is a “cost of doing business” as an omnichannel retailer, it doesn’t mean that the logistical solutions are easy.
Stores’ return policies (and the impact on margins) are a frequent subject of discussion on RetailWire. My contention: A well-managed (but liberal) return policy can be a key competitive advantage and brand differentiation:
Is the return problem centered on high end electronics and tech gear, or on apparel? It’s important to have the answer before developing a solution. If the former, it’s correct that sales associate should make sure the consumer understands how something works before the register is rung. (We all know from personal experience that this doesn’t always happen.) But clearly there is a correlation between tighter household budgets and higher return rates, so the trend may not improve until the economy is on firmer footing.
At the same time, stores should view liberal return policies as a positive way to drive business, not a negative cost. There is no doubt that retailers with “no hassle” programs have used them as a marketing tool and loyalty driver. Like almost everything else in retail, returns are expressed as a percentage of top line sales…so it’s important to drive those sales with a variety of tactics and policies.
It’s a good time of year to discuss stores’ return policies, which range from the very strict to the very liberal. My comment on Retail Wire:
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.