Fewer Happy Returns

In a recent article, Fortune magazine discusses attempts by retailers to tighthen their returns policy. Apparently stores are now tracking down shopper's return and exchange behavior and flagging down those that they think are "wardrobing." Wardrobing is the practice by some buyers of buying clothes, wearing them for a party or occassion and returning it the next day or two. This fraudulent practice cost stores $16 billion a year. Some customers are surprised to find out that stores are declining their return requests more frequently. Stores claim that the stricter returns policy are not meant to accuse customers that they are theives but a way of telling them that they are not profitable customers.

I think stores have other motives. The rise of internet shopping I would suggest has something to do with the stricter returns and exchange policy. Internet stores generally price low, which makes sense because they don't have to spend for sales staff, brick and mortar (B&M) stores, and fancy display racks. In addition, I would venture to guess that they are able to minimize fraudulent returns because it costs the consumer to return or exchange items. Internet shoppers have to ship and spend time waiting for the exchanged item to come back. The time element also precludes "wardrobing."

Unfortunately, B&M stores don't have the same advantages, in addition to the fact that consumers can free ride on store services (i.e. touching the merchandize on site, and trying it on) and going to the internet for bargains-both of which I have done before). B&M stores have to be strict with returns policy to curve this free-riding. It remains to be seen how the new return policy is going to affect sales for B&M stores. In 1888, Sears affected the way retailing was done with the introduction of the first mail order catalog, today the internet is having the same effect.