Brick-and-mortar retailers are stuck between a rock and a hard place when it comes to return policies. From your customers’ perspective, online purchases make for seamless returns. E-commerce returns are often free, with labels included in the shipment box. Brick-and-mortar retailers, hungry to attract and retain shoppers, are increasingly expected to offer flexible return policies in order to compete with online.
That said, returns hurt your bottom line. This may be especially true in a brick-and-mortar store where sales velocity is lower than on your website. In apparel in particular, your sales associates invest a good deal of time and effort into both making and subsequently reversing a sale. Commission-based sales associates may suffer a dip in morale—and are then more likely to turn over—when their take home pay is threatened every time a customer makes a return.
The solution, then, is to enact reasonable, flexible return policies, while instilling practices that reduce the amount of returns to begin with. While managing flagship doors throughout my career for both large and small apparel retailers, I encouraged my team to use these techniques to keep returns in check. Here’s an overview on how you can do the same, while maintaining happy store teams and happier customers.
Best Return Policies in the Biz
According to a 2017 study by Appris Retail, the US retail industry makes $3,513 billion in sales each year, 10% of which ($351 billion) is eaten away by returns. Appris calls the size of returns “overwhelming,” and likens it to the estimated 2017 federal budget deficit of $400+ billion. Of that 10%, approximately, 6.5% is estimated to be return fraud and abuse (examples of this include return of stolen merchandise, returns of used merchandise, and the like).
For apparel retailers, the rate of return (13%) is even greater than the industry average. The same goes for department stores (nearly 14%). Given their susceptibility to return-incurred loss, retailers in these verticals are the most focused on rolling out return policies that entice customers to shop, but keep returns at bay.
Nearly all retailers have return policies that expires after a set number of days, and this is certainly true for most of the top 20 retailers. 30-90 days seems standard, but some leading departments stores like Macy’s (180 days) and Kohl’s (1 year) are more flexible. It’s also interesting to note that these top dogs have clearly delineated exceptions to their return policies, presumably to target categories where return-related losses sting the most.
For instance, Macy’s return policy shrinks to a 30-day window for “Last Act” items. Presumably, these are already so far marked down that Macy’s truly just wants them out the door. Likewise, Kohl’s limits electronics returns to a 30-day window. Smartly, Kohl’s policy becomes more flexible during the holiday season, giving shoppers until the end of January to return items purchased between November 1st and year’s end.
Nordstrom has always had an interesting take on returns. Once known for its super flexible policy, which allowed for cash refunds without receipt, the department store’s policy is now more buttoned-up in an attempt to combat return fraud. Although the policy currently states that refunds are applied in the method of purchase, it includes that Nordstrom “handles returns on a case-by-case basis with the ultimate objective of making customers happy.” If no receipt is available, they require personal identification (possibly to track chronic returners) and will offer a refund at the current price on a Nordstrom gift card.
The above return policies demonstrate just how much flexibility retailers have in rolling out return policies. They key is to have a policy that protects you from fraudulent returns by requiring proof of purchase. More than that, the language you (and your associates) use in talking about your return policy can make a big difference in keeping your customers loyal.
5 Tactics to Reduce Apparel Returns
Your store personnel can do more than recite and enforce your return policies. With a little training, savvy associates can incorporate return-repelling practices into their selling style. An added bonus? Employees who feel valued and challenged will be happier working in your stores, and less likely to turn over.
To that end, train your store managers on these practices and make sure they instill them in their sales associates. Empowering your store staff may do more than reduce retail returns.
1. Use Reverse Psychology
The more your customers sense that store staff are anxious about returns, the less confident they’ll be in your brand. Back up flexible return policies with associates who espouse how easy they’ll make the process and how happy they are to assist with returns. To bolster their claims, feature signage with return policies at multiple locations in your store and state policies clearly on receipts. Shoppers want to know you’ll be there for them no matter what. If you can show customers you’ve got their backs, they’ll feel safer spending their money with you and more loyal in the long term.
Another way your associates should use reverse psychology is by encouraging trips to the fitting room. This can be a high challenge with today’s multi-tasking shopper. Nearly always in a rush, she’s is eager to get out of your store as quickly as possible. Sales associates tend to acquiesce by ensuring her: “You’re definitely a size small!”
While this type of interaction may initially make everyone happy—less push back from the customer, less work for the store team, no risk of losing a sale—shoppers who give the products they’re considering a test drive are much less likely to return. An added benefit of getting your customer in the fitting room? The chance to upsell with thoughtful add-ons while your customer is already getting undressed. And don’t make her ask for a fitting room. Pull the products she’s considering (as well as items that might go with them) in her size before she’s even done looking. If you can make it that easy, she won’t be able to resist.
2. Be Flexible
Take a cue from Nordstrom’s “case-by-case” return policy. Store managers should know you trust them to make reasonable exceptions to your return policy as needed in their commitment to customer satisfaction.
For example, let’s say your return policy is 30-days and a valued customer comes back with an unworn garment after 90 days. You don’t want your associates to live and die by your 30-day window and risk losing a customer forever. This is a unique opportunity for them to listen and connect more meaningfully with their customer. Give them the power to offer a store credit as a first line of exception to the rules. If they get the sense that a store credit won’t satisfy the shopper, give them autonomy to issue a refund and save the relationship.
Overall, it’s critical that you help them see the bigger picture, and understand the lifetime value of the customer over the value of a single transaction. The momentary sting of a return, even a big one, is nothing compared to wondering whatever happened to a frequent shopper of yore.
3. It’s a Pull, Not a Push
Your sales associates shouldn’t take a one-size-fits-all approach to sales. Train them to listen intently and think on their feet to help each shopper find the products that work best for her. This touches on better training methodology that helps teams gain more than a superficial understanding of their shoppers. They need to know where each product fits in with each of your customer segments.
If a customer comes in and wants a product you don’t have, your team should get creative and think outside the box. But don’t push her toward a poor substitute in desperation. Sure, sales associates who employ hard sell tactics are more likely to persuade a shopper to walk out of the store with shopping bags in hand. But this is the same customer who’ll go home, regret being pressured to purchase, and then return the item you sold her. In a best case scenario, you’ll be spared a return, but your customer will peer into her closet with regret each time she sees the blouse she was pressured into purchasing—but never wears. And she probably won’t return to be fooled again.
4. Curb Competition in Your Stores
Sure, a little healthy competition never hurt anyone. But in a retail setting, aggressive sales associates mean shoppers aren’t getting the best possible customer experience. A sales associate who’s looking to sell more than his peer might (once again) happily send a customer out the door with a product he pressured her into buying, rather than one she really wants. And that purchase will probably come back a few days later.
In order to achieve a healthy level of competition, be wary of putting too much emphasis on KPIs that spur rivalry between sales associates. You might even toss your individual commission structure or sales bonuses for shared group bonuses. Why not divide the pool by share of hours worked? Tactics like these help ensure that your team works well together for the good of your store and that your customers are actually getting the best care—not just being fought over by sales associates.
5. Be Transparent
Transparency can come in many forms—comprehensive signage with product features, informative tickets, and more. It can also come in the form of internal documents and collateral that helps store personnel honestly communicate the features and benefits of products. Above all, train your store staff to be realistic and upfront about a product’s shortcomings. Does a certain tank top just not work for petite shoppers? Your staff should honestly tell shoppers it tends to run long. In doing so, you’ll inspire trust and manage shopper expectations to reduce disappointment that leads to second thoughts later on.
The Truth About Brick-and-Mortar Returns
In the end, the answer to reducing online returns may be fairly straightforward—while protecting yourself from return fraud, you must give customers the information they need to make the best purchasing decisions possible. And, in an online setting there’s not much you can do, as customers will inevitably change their minds once they actually see, feel, and try on your merchandise. In brick-and-mortar, shoppers can do all these things before they buy, giving stores an edge on lifting the burden of returns on your bottom line.
The key, then, is ensuring your store teams are enacting practices directly intended to reduce retail returns. CB4 helps brick-and-mortar retailers deepen their connections with consumers by providing store teams with specific, actionable insights to drive sales. Leading apparel retailers use CB4 to empower sales associates and transform customer experiences.