Whose customers are more honest, Wal-Mart’s or REI’s? Based on recent announcements from the companies, one might conclude shoppers at the discount store giant are more trustworthy than those of the outdoor gear retailer.
Already the nation’s largest seller of fresh fruit and vegetables, Wal-Mart wants more market share, so it has initiated new sourcing, quality control and employee training strategies for its produce section. The lynchpin of the program is a 100% money-back guarantee. What’s more, customers do not have to bring the offending produce back to the store to claim a refund. Their word will be their bond, or as Wal-Mart explained in its release, “If customers are not completely satisfied with Walmart's produce, they can bring back their receipt for a full refund. No questions asked and no need to bring back the produce.”
No doubt Wal-Mart will keep tabs on customers to make sure the same ones are not abusing the privilege. Easy enough to do if the customer paid with a credit card. But many of the retailer’s patrons pay in cash, so it might be hard to track all who make returns, especially if there are multiple Wal-Marts in the local market. Still, it’s nice to see corporate America extending trust to the average citizen.
Seattle-based REI, on the other hand, has shelved its long-standing policy of accepting returns till the end of time. Because of a few bad apples taking advantage of the never-ending return policy, REI has put a one year limit on the practice, unless products prove to be defective. Outlet merchandise bought on REI.com will be returnable for just 30 days.
In explaining the policy change to The Seattle Times, Senior Vice President of Retail Tim Spangler said, “What we found is that (a) small group of folks who are probably extending the policy beyond its intent, is getting bigger. And It’s not a sustainable thing long-term if we want to maintain this fantastic policy.”
The Times also reported, “To reduce dubious returns, REI also has stopped accepting returns without question and is more insistent that there be proof of purchase. Some REI stores had been known to give store credit, if not money-back refunds, to customers without a receipt.”
The newspaper noted that REI, which officially stands for Recreational Equipment Inc., had earned two dubious nicknames for its liberal return policy: “Rental Equipment Inc” and “Return Everything Inc.”
REI has reason to be more cautious. According to a report in The Wall Street Journal, the National Retail Federation “noted a newer trend of stolen goods being returned to stores without receipts for store credit in the form of a gift card. That gift card is then sold online or elsewhere for cash. The NRF's (ninth annual organized retail crime) survey reported that 77.8% of respondents had experienced some form of this gift card scheme.”
Accepting returns without making customers feel like criminals is a delicate balancing act. Reputations are burnished or tarnished at the customer service desk. Stories, some no doubt apocryphal, abound about retailers taking back suspect goods including some they didn’t even sell. Nordstrom has always been held up as the gold standard. It reputedly took back a set of four tires even though it never sold tires. Another of its legendary returns was of a wedding dress said by the mother of the bride never to have been worn by her jilted-at-the-altar daughter. Yet when the store staff took the dress out of the box after the customer left grains of rice came out as well. And then there was the story of the widow who returned a suit bought by her recently deceased husband. Store staff noticed the suit had an unusual odor. Turned out to be from embalming fluid.
One of my favorite retailers is Costco because of its liberal return policy. But even Costco had to make accommodations because some customers were taking advantage. They would return consumer electronics items when newer models came out. So Costco, as did many other retailers, imposed a 90-day window for returns of electronics. Some, like Best Buy, even put a restocking fee in place.
One of my favorite examples of a rigid return policy gone wrong happened before my very eyes in a Child World toy store some 30 years ago. A distraught father was trying to return a plastic kiddy pool, only to be repeatedly told the store did not carry that brand. The customer screamed and screamed, insisting he bought the pool there, that he’d never shop there again if he didn’t get satisfaction. The store manager stuck to his guns. It was embarrassing to all who witnessed the extended exchange.
No doubt the customer had conflated Child World with the Toys “R” Us barely a mile away. When I related the incident to Charles Lazarus, the founder and CEO of Toys “R” Us, he said his company’s policy was to take back any toy, even if it was not stocked by his chain. The overall customer experience was most important. The value of a customer telling his or her friends and relatives about a good experience, even one where they snookered the retailer, provided more long-term positive results than the negative publicity that same customer would generate if he or she went away angry.
A few years later, Child World, the second largest toy store retail chain, closed down. Toys “R” Us is still in business.