Return Policies from the Consumers’ Point of View

1. Return Policiesfrom the Consumers’ Point of View Dr. Dale S. Rogers Center for Logistics Management University of Nevada Reverse Logistics Conference Lake Tahoe, NV September 13, 2000

2. Presentation Agenda • Background of focus group study • Purpose and goal of study • Methodology used • Focus group participants • Question by question analysis • Key messages

3. Purpose Statement • The purpose of this project was to determine return habits and examine attitudes surrounding return policies and processes for both brick and mortar and e-commerce retailers.

4. Methodology • Focus groups • homogeneous populations • within the U.S. & Canada • Facilitators • Deana Rogers 5 • Olatz Apalategui 3 • Eugenia Parker 2 • Genet Sauer 1 • Shannon Thawley 1 • Group 1 • Total 13

5. Methodology • Developed: • Questionnaire - adjusted after first session • Bio form • Incentives • T-shirts and food

6. Group Location Date Stay at home moms Reno, NV 3/13 Stay at home moms Fabyan, CT 3/21 Hispanic, immigrants Reno, NV 4/11 Hispanic, immigrants Reno, NV 4/12 Young professionals Toronto, Canada 4/14 Affluent women Marin County, CA 4/27 College students Azusa, CA 4/27 College students Chicago, IL 4/29 Women (35-45) Grand Rapids, MI 5/4 Senior women Lansing, MI 5/5 Jazzercise women Cleveland, OH 5/6 College students Newnan, GA 5/19 Women (45-70) Newnan, GA 5/19 Focus Groups

7. How often do you usually return something to the store? • Return rates varied • Majority of college students do not return items • Stay at home moms are more likely to return items • Men do not like to return items

8. Why do you usually return something to the store? • Defective/damaged • Wrong size • Did not like it • Buyer’s remorse • Duplicate gifts • Found item cheaper somewhere else • Didn’t try on clothes before purchasing – take back what you don’t want • “Grandma buys it”

9. When you have a quality problem with a product do you usually return it? • For college students, it depends on price • Most women will return items - “freedom at 40” • Hispanics not aware they can return items • Hispanics intimidated by return counter employees

10. Do you prefer shopping at a particular store because of the store’s return policy? If so, which stores? • Many shoppers select store because of return policies • Women care about return policies more than men • If stores tightened return policies most shoppers would continue to shop there

11. Preferred Nordstrom’s Target Mervyns Meijer Dell Wal-Mart Kohl’s Petite Sophisticate Abercrombie & Fitch Not Preferred Burlington Coat Factory Kmart Brookstone Ames Shoppers Duemart (Canada) Motherhood Maternity Stores

12. Preferred Stores • “Customer is right” • “They are really nice” • Nordstrom's is a clear favorite • Some stores are perceived negatively although perceptions do not match policy. Service desk is a clear problem in some places.

13. Would you switch from your current retailer/store if they tightened their return policies? • Consensus is that most consumers would continue to shop at favorite stores even if policy was tightened • A few thought that store’s return policy depended on the individual working the return counter

14. How much time do you think retailers should allow consumers to return a product? • Nearly unanimous that electronics should have longer return time than apparel • Clothes - 1-2 months • Electronics 2-3 months • Longer for gifts

15. Have you ever heard of anyone that has given an inaccurate reason for returning a product? • Prom dresses & wedding gowns • Clothes abuse • Theft returns • Nordstrom loans

16. In-store credit vs. refund • Generally, no one likes a “due-bill” • If it is a store that is regularly shopped at, consumers do not mind in-store credit • Cash/credit option (Meijer)

17. How do you feel about restocking fees? • Most participants had heard of restocking fees but not personally experienced them • General feeling was negative • If customer understands policy they will accept them • Canadians unaware of restocking fees

18. Purchase with intent to return? • Women have many reasons not to try on clothes at the store • “Toddlers in the dressing room” • Shop for husband • Time pressures

19. Do you think that different products should have different return policies? • Nearly unanimous that computers and electronics should have longer return windows than apparel • Gifts should have longer return periods • College students do not have many opinions about this • “Defective is defective”

20. Receipts? • As long as store policy is clear, having a receipt is not a big issue • Several consumers like gift receipts • “Receipt-in-an-envelope” controversial

21. Have you ever purchased a product off the Internet? • If yes, when purchasing a product off the Internet, do you take into account the return policy of the online retailer? • Do e-commerce companies need to offer different return policies from the traditional stores? Why? How should they differ?

22. Internet Results • Most college students and affluent women had purchased over the web • Surprising number of college students have credit cards. Students likely to take return policy into consideration when buying over the Internet • Experienced Internet shoppers consider return policies • Fear of giving out credit card over Internet

23. Is it easier or more difficult than returning a product to a traditional store? • Generally, the belief was that it is easier to return Internet items • Prefer on-line store that has brick-and-mortar location to return to • “They come pick it up”

24. What do you think happens to the returned product? • For the most part, consumers do not know where returned items go • “There is a special little country somewhere that gets all of this stuff. If you knew where it was you could go there and get really good deals.”

25. Return policies are too liberal, too conservative or about right? • Generally, respondents believed that return policies are about right. Some of the affluent women thought return policies were too liberal “too wasteful in this country” – encouraged dishonesty - “it’s okay to be dishonest” • Believe that stores should be profitable - higher costs passed on to consumers • Customer service people should be paid more because it might make them happier

26. Hispanics • If are treated well will return (are brand loyal) • Majority agreed that ‘not liking’ was not a valid excuse • Don’t feel comfortable about returning goods • “Especially when you look Spanish, they don’t treat you well” • Women often are the ones that return the products

27. Key Messages • As interviews progressed the groups moved from wanting the store to take all of the risk to being consumers being responsible • When people have information and can really see store’s point of view they can be compliant. This was found in every group.

28. Key Messages • communicate return policies clearly • Print policy on back of receipt • Mention policy at the point of sale • Envelopes with the name of store helps customers find their receipts easier • Offer gift receipts • If policy is clearly communicated consumers will generally go along. If they do not understand they will be angry

29. Key Messages • Folks with “hard lives” less likely to return items • Men are much less likely to return items • Customers like cash/credit option - Meijer • Dressing room big issue to Moms. “You can’t chase a kid if you are naked.” • Tightening policy not a big deal for majority of respondents - however, they also said they prefer Nordstrom’s policy

30. Key Messages • Items that look like they have been returned (package damaged - no tags) are unlikely to be purchased

31. Key Messages • Not much difference between the U.S. & Canada • Not much difference between Hispanics and Whites. Hispanic men appear to be less likely to return items than white males

32. Key Messages • Internet customers likely to have higher education than non-Internet users • Most college students have credit cards and feel comfortable purchasing over the Internet • Internet consumers look at return policies before purchasing • demographic groups?