The fun shopping days prior to Christmas and the joy of giving are inevitably followed by ‘how am I going to wear this bright red sweater…’ or ‘what on earth is this gadget for…’ as we figure out where to store the gifts we received this Christmas. With storage space at a premium, and cash flow tightening for most of us, the ability to return or exchange gifts for usable items has become increasingly important. So, this year, I decided to gift items easy to return or exchange. This path, of course, led to merchants with the best returns and refunds policies.
I found a wide range of policies even within a particular category and, to my surprise, some merchants had good deals as well as superior returns policies. I think I am not alone in the mistaken belief that only high end retailers like Nordstrom or LL Bean can offer a ‘100% satisfaction guaranteed or return anytime for a full refund/ no questions asked’. Take the leading discounter -- Costco, for example. Costco has until now allowed customers to return items at any time for a full refund, except for personal computers, where returns were limited to six months. Recently Costco slightly modified this very liberal policy to give customers 90 days to return televisions, computers, cameras, camcorders, portable music players and cell phones. Compare this to Apple’s 14-day return policy! You can be sure that all electronic items on my gift list were purchased from Costco.
Some merchants have product specific and even brand specific return policies. At Wal-Mart within the Electronics department, if you take the time to read the fine print, computer hardware must be returned within 15 days of receipt; computer components and computer accessories must be returned within 45 days of receipt; camcorders and digital cameras must be returned within 30 days of receipt; GPS units, digital music players and portable video players must be returned within 15 days of receipt. My guess is that many Wal-Mart customers find out the hard way since generally Wal-Mart accepts returns after 90 days.
This made me wonder about the impact of return policies on customer loyalty to a merchant. After all, most consumers buy things they would rather keep provided it satisfies their need and meets their expectations. Wide scale abuse of returning items for some obscure gain will likely never happen. I also wonder if during tough economic times consumers may be willing to pay a premium for attractive returns policies, especially for big ticket items, to make sure that their investment is really worth what they believed it to be in the showroom! And, yet, retailers like Costco, Nordstrom and LL Bean continue to be the exceptions, while most others tighten their return policies hoping that it will benefit their bottom line. While it is true that tougher return policies or processes can intimidate some of us into keeping items that we will never really use or enjoy, will we return to buy more from that merchant or recommend the merchant to others? Probably not. But then again, perhaps these merchants are thinking of their return policies as drivers of cost and not as an important part of the overall customer experience with impact on customer loyalty and more importantly, future sales.
Contributed by Shubhra Ramchandani, VP, Synovate
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