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Consumers beware: retailers have once again drawn a line and taken sides. One group is championed by the likes of Zappos, Nordstrom, L.L. Bean, and a wave of service oriented start-ups, the other by merchants best classified as the KGB of customer service. The first bunch sees their mission as fulfilling customer needs and creating user experiences that build lasting bonds, while the opposition seems to believe that increasing demands/restrictions upon consumers is somehow good for business. The issue this time: merchandise returns.
Return fraud is a big deal. For the 2011 holiday season the NRF estimated losses at $3.5B. Receipts - the lack thereof and sometimes the validity thereof are a key issue. The NRF reportsthat 62% of retailers require customers to provide ID like a driver's license (to be recorded) in order to make returns without a receipt, even though 86% are legitimate returns. Contrast that with retailers that provide "hassle-free" returns with/without receipts and you can quickly see how attitude towards customers is a defining business trait.
Ethical consumers that have lost/damaged a receipt or received a gift are caught in the crossfire between militant stores and crooks. Those stores are punishing authentic/valuable consumers for what are in large part, their own poor transaction/security methods. In contrast, retailers like Trader Joe's know that being liberal about returns encourages more sales and goodwill towards the merchant, ultimately offsetting losses and increasing long term growth.
It gets more complex because of the middle ground: serial returners and people who practice "wardrobing". Serial returners are not criminals. They return items for any number of reasons from habit, to uncontrolled spending, to deeper psychological motivations. Wardrobers are schemers, intent upon using a merchant's leniency for their gain.
Whatever the situation/motivation, some retailers have deeply overreacted and gone far afoul, steamrolling over the rights and dignity of honest patrons, as illustrated in these examples:
Within a few days of making a small tool purchase at Sears, I decided to return it in the unopened package, with the receipt. A verbal battle ensued because I refused to hand over my driver's license to make the return. Nothing in their policy stated it was required. At Best Buy, we purchased two $15 iPod arm bands. Upon returning one that was too large, (within two weeks, with the receipt) we were told by the manager that all returns require gathering driver's license info. Sears killed a 20+ year relationship and Best Buy (where I never attempted a return before) has driven my business elsewhere on-line. Rob Chadwick, a Home Depot customer, had a similar experience.
This trend gets even more troubling when judgments about return fraud are outsourced to third parties like The Retail Equation or Veridocs. TRE (claiming 17,000 participating locations) states that its Return Activity Report is available to consumers it profiles, but company practices are not public, not scrutinized by an independent observer, nor is it clear how they use, share, and protect such sensitive information. Veridocs says it was born of The Patriot Actand provides retailers with customer ID verification "through the creation of a positive or negative customer file". Reports and files on individuals, aggregation and sharing, highly personal data collection - have retailers forgotten that they are not Big Brother? Have they lost sight of selling merchandise, not data? Do they believe toying with people's lives and harassment is a business strategy? For many, it seems so.
The returns situation is challenging to resolve, but crass corporate decisions that neglect consumer’s privacy, trust, and brand loyalty are the absolute wrong way to go. Outsourcing data collection and aggregating it with competitors and other sellers that have their own interests, objectives, and customer demographics, is not only lazy and short-sided, but a huge liability waiting to erupt. Evidence the many recent data breaches affecting retailers and you can readily imagine the backlash if this sort of customer profiling data (replete with highly sensitized information) were misused or stolen.
So what will happen to the cadre of retailers that are getting more defensive/hostile towards their own customers? Over time, they’ll likely lose patrons and profits to retailers that understand relationships and how to create rewarding user experiences across all channels of interaction. They’ll likely also become part of the chorus of whiners and crybabies that blame e-tail, mobile, showrooming, and little green men for the problems they create and the relationship building opportunities they sabotage.
Customer-friendly solutions to the returns conundrum do exist. Merchants that want to remain competitive and stop eroding their valuable client base simply need to utilize them. Here are some suggestions:
Unique transaction ID's - web sites do it, retailers can too. Unique sales receipt ID’s, verifiable from any register in real-time will immediately eliminate fake receipts presented for return.
RFID merchandise tagging - an investment offset by savings in shrinkage that will provide item level tracking from warehouse, to register, to return desk, plus other valuable supply chain data.
Duplicate digital receipts - ridiculously easy and inexpensive to implement and tie to loyalty programs and effortless enough to offer to any customer.
Mobile checkout - true mobile checkout tied to a phone/app combo provides user validation, digital receipt tracking, and order history, without creating consumer dossiers.
Conscientious customers don’t want to see their favorite stores burned by the immoral or illegal actions of the few, but at the same time, they don’t want to pay for those transgressions at checkout. Nor will they stand for their privacy to be invaded, their integrity questioned, and what amounts to hostile actions taken against them.
Ultimately, consumers can stand firm, confident that there are enough merchants and start-up virtual retail services with open arms that a day of reckoning is coming for oppressive retailers. The “good guys” understand that individual relationships are more valuable than individual transactions and that respect is earned, not taken… and they will profit from it.