 | The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject.(May 2010) |
In retail, a product return is the process of a customer taking previously purchased merchandise back to the retailer, and in turn receiving a refund in the original form of payment, exchange.
Many retailers will accept returns provided that the customer has a receipt as a proof of purchase, and that certain other conditions, which depend on the retailer's policies, are met. These may include the merchandise being in a certain condition (usually resellable if not defective), no more than a certain amount of time having passed since the purchase, and sometimes that identification be provided (though usually only if a receipt is not provided). In some cases, only exchanges or store credit are offered, again usually only without a receipt, or after an initial refund period has passed. [1] Some retailers charge a restocking fee for non-defective returned merchandise, but typically only if the packaging has been opened. [2]
In certain countries, such as Australia, consumer rights dictate that under certain situations consumers have a right to demand a refund. [3] These situations include sales that relied on false or misleading claims, defective goods, and undisclosed conditions of sale.
There are various reasons why customers may wish to return merchandise. These include a change of one's mind (buyer's remorse), quality of the merchandise, personal dissatisfaction, or a mistaken purchase of the wrong product. For clothing or other sized items, it may be a lack of a correct fit. Sometimes, there may be a product recall in which the manufacturer has requested (or been ordered) that the merchandise be brought back to the store. Also, gift receipts are offered sometimes when an item is purchased for another person, and the recipient can exchange this item for another item of comparable value, or for store credit, often on a gift card. [4]
In the US, an estimated 8–10% of in-store sales is returned whereas online sales may result in 25–40% returns. In Asia and Europe, less than 5 percent of purchases are returned. [5] US shoppers returned $396 billion worth of purchases in 2018 – brick-and-mortar and online, according to the National Retail Federation (NRF). [6] To fight high return rates in e-commerce, a realistic product visualization is needed. Next to imagery and video content, 3D technology like augmented reality and virtual reality, but also simply 3D in the browser can enhance the shopping experience and lower return rates. [7]
In the UK, Logistics costs for returns is estimated at between £20bn and £60bn per year. Figures show that 33% of retailers had to increase prices to counter rising returns volumes whilst 31% of retailers said managing returns impacts their profits. For some companies the costs of accepting returns amounts to as much as 5% of their annual turnover. [8]
In the United States, various abuses using the return process allegedly cost retailers more than $9 billion annually. [9]
One common practice is the use of the system in order to "borrow" the merchandise at no charge. The customer who engages in this practice purchases the item for temporary use, then returns it when finished. Examples include an article of clothing worn for a single occasion, or a book that is returned after it has been read. This practice is called "wardrobing." [10] Stores such as Macy's and Ross put large "do not remove" tags on women's dresses to try to defeat this, not accepting returns or exchanges for any items that do not have the tag. Many stores also refuse to refund certain items like reading materials, inflatable airbeds (Target and Walmart), and even portable heaters (Dollar General).
Another problem is when customers legitimately purchase an item, then re-enter the store with the receipt, take an identical item off the shelf, and approach the customer service desk requesting a refund. In the process, they essentially receive the item for free, and may be charged with shoplifting or another similar crime if caught.
Others have been reported to print fake receipts which they use to return stolen merchandise for a cash refund. However, this is nearly impossible now that most stores use individually numbered receipts. Scanning the receipt's barcode at the cash register links legitimate returns to a database that validates the original purchase. (Despite this, some stores that have had such systems for years still refuse to accept a photocopy of a legitimate receipt where the original may have been misplaced, or obscured due to the store's use of cheap thermal paper or very light ink.)
Some retailers have turned to a practice in which customers who return or exchange items excessively (beyond the guidelines set by a retailer) may be prevented from making a return or exchange with that particular company. [1]
An agency called The Retail Equation (formerly The Return Exchange) collects data from participating retailers via a swipe of a driver's license, or most other types of government issued photo identification. The information found on the license is collected into a database, and other stores operated by that particular retail company can use this information to deny a return. This system can be used to prevent various problems, such as return fraud. [4] [9] These controversial practices of collecting information have been addressed by privacy rights advocates and spurred a movement for boycotting chains that collect consumers' private information and allow third party sources to use it. The request of presenting a form of identification for returning products and collecting the information has stirred controversy, especially if the customer that purchased the product was a minor (under the age of 18). Immigrant rights groups have voiced serious concern over the practice since most illegal immigrants don't have a state ID or a drivers license and this practice could potentially be used to discriminate against them, however, all of the stores that are associated with The Retail Equation, accepts all types of government issued photo identification, including, but not limited to, driver's licences (regardless of issuing state), state I.D.'s (regardless of issuing state), passports (regardless of issuing country), Mexican consular I.D.'s (i.e. MCAS), concealed carry firearm permit's (regardless of issuing state), and USA military I.D.'s.
Legislation exists in various parts of the world giving consumers the right to return goods in as-supplied condition for a full refund, within a set period of time, known as a cooling-off period. Sometimes this legislation only applies to distance sales such as e-commerce.
Shoplifting, shop theft, retail theft, or retail fraud is the theft of goods from a retail establishment during business hours, typically by concealing a store item on one's person, in pockets, under clothes or in a bag, and leaving the store without paying. With clothing, shoplifters may put on items from the store and leave the store wearing the clothes. The terms shoplifting and shoplifter are not usually defined in law. The crime of shoplifting generally falls under the legal classification of larceny. Shoplifting is distinct from burglary, robbery, or armed robbery. In the retail industry, the word shrinkage can be used to refer to merchandise lost by shoplifting, but the word also includes loss by other means, such as waste, uninsured damage to products and theft by store employees.
Merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to displaying products that are for sale in a creative way that entices customers to purchase more items or products.
Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.
A receipt is a document acknowledging that a person has received money or property in payment following a sale or other transfer of goods or provision of a service. All receipts must have the date of purchase on them. If the recipient of the payment is legally required to collect sales tax or VAT from the customer, the amount would be added to the receipt, and the collection would be deemed to have been on behalf of the relevant tax authority. In many countries, a retailer is required to include the sales tax or VAT in the displayed price of goods sold, from which the tax amount would be calculated at the point of sale and remitted to the tax authorities in due course. Similarly, amounts may be deducted from amounts payable, as in the case of taxes withheld from wages. On the other hand, tips or other gratuities that are given by a customer, for example in a restaurant, would not form part of the payment amount or appear on the receipt.
Consumers Distributing was a catalogue store in Canada and the United States that operated from 1957 to 1996. At its peak, the company operated 243 outlets in Canada and 217 in the United States, including stores in every province in Canada and in the states of New Hampshire, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Maryland, California and Nevada.
Retail loss prevention is a set of practices employed by retail companies to preserve profit. Loss prevention is mainly found within the retail sector but also can be found within other business environments.
A duty-free shop or store is a retail outlet whose goods are exempt from the payment of certain local or national taxes and duties, on the requirement that the goods will be sold to travelers who will take them out of the country, who will then pay duties and taxes in their destination country. Which products can be sold duty-free vary by jurisdiction, as well as how they can be sold, and the process of calculating the duty or refunding the duty component.
In marketing, a rebate is a form of buying discount and is an amount paid by way of reduction, return, or refund that is paid retrospectively. It is a type of sales promotion that marketers use primarily as incentives or supplements to product sales. Rebates are also used as a means of enticing price-sensitive consumers into purchasing a product. The mail-in rebate (MIR) is the most common. A MIR entitles the buyer to mail in a coupon, receipt, and barcode in order to receive a check for a particular amount, depending on the particular product, time, and often place of purchase. Rebates are offered by either the retailer or the product manufacturer. Large stores often work in conjunction with manufacturers, usually requiring two or sometimes three separate rebates for each item, and sometimes are valid only at a single store. Rebate forms and special receipts are sometimes printed by the cash register at time of purchase on a separate receipt or available online for download. In some cases, the rebate may be available immediately, in which case it is referred to as an instant rebate. Some rebate programs offer several payout options to consumers, including a paper check, a prepaid card that can be spent immediately without a trip to the bank, or even as a PayPal payout.
A pre-order is an order placed for an item that has not yet been released. The idea for pre-orders came because people found it hard to get popular items in stores because of their popularity. Companies then had the idea to allow customers to reserve their personal copy before its release, which has been a huge success.
Self-checkouts (SCOs), also known as assisted checkouts (ACOs) or self-service checkouts, are machines that provide a mechanism for customers to complete their own transaction from a retailer without needing a traditional staffed checkout. When using SCOs, customers scan item barcodes before paying for their total shop without needing one-to-one staff assistance. Self-checkouts are used mainly in supermarkets, although they are not uncommon in department or convenience stores. Most self-checkout areas are supervised by at least one staff member, often assisting customers process transactions, correcting prices, or otherwise providing service.
Refund theft, also known as refund fraud, refund scam or whitehouse scam, is a crime which involves returning goods ineligible for refund to a retailer in exchange for money or other goods. The goods returned may have been acquired illegally, or they may be discarded damaged goods. Other schemes involve sealing weights or other simulated merchandise in the original product packaging, or switching labels on items to purchase them at a lower price and then returning them for their original value.
Once the strategic plan is in place, retail managers turn to the more managerial aspects of planning. A retail mix is devised for the purpose of coordinating day-to-day tactical decisions. The retail marketing mix typically consists of six broad decision layers including product decisions, place decisions, promotion, price, personnel and presentation. The retail mix is loosely based on the marketing mix, but has been expanded and modified in line with the unique needs of the retail context. A number of scholars have argued for an expanded marketing, mix with the inclusion of two new Ps, namely, Personnel and Presentation since these contribute to the customer's unique retail experience and are the principal basis for retail differentiation. Yet other scholars argue that the Retail Format should be included. The modified retail marketing mix that is most commonly cited in textbooks is often called the 6 Ps of retailing.
Visual merchandising is the practice in the retail industry of optimizing the presentation of products and services to better highlight their features and benefits. The purpose of such visual merchandising is to attract, engage, and motivate the customer towards making a purchase.
A stockout, or out-of-stock (OOS) event is an event that causes inventory to be exhausted. While out-of-stocks can occur along the entire supply chain, the most visible kind are retail out-of-stocks in the fast-moving consumer goods industry. Stockouts are the opposite of overstocks, where too much inventory is retained. A backorder is an order placed for an item which is out-of-stock and awaiting fulfillment.
Fashion merchandising can be defined as the planning and promotion of sales by presenting a product to the right market at the proper time, by carrying out organized, skillful advertising, using attractive displays, etc. Merchandising, within fashion retail, refers specifically to the stock planning, management, and control process. Fashion Merchandising is a job that is done world- wide. This position requires well-developed quantitative skills, and natural ability to discover trends, meaning relationships and interrelationships among standard sales and stock figures. In the fashion industry, there are two different merchandising teams: the visual merchandising team, and the fashion merchandising team.
Return fraud is the act of defrauding a retail store by means of the return process. There are various ways in which this crime is committed. For example, the offender may return stolen merchandise to secure cash, steal receipts or receipt tape to enable a falsified return, or use somebody else's receipt to try to return an item picked up from a store shelf.
Price adjustments, also called price protection, is a retail practice in which customers can obtain a partial refund of the purchase price of an item if they can show it on sale at a lower price within a fixed time frame. In such circumstances, retailers will do a “price adjustment,” refunding the difference between the price the customer paid and the price now available. For example, if a customer buys a TV for $300, and it drops in price by $100, they can go back to the retailer to ask for a price adjustment and get the difference returned to them, often in cash. Retailers with price adjustment policies include Macy's, the Gap, and Staples.
Showrooming is the practice of examining merchandise in a traditional brick-and-mortar retail store or other offline setting, and then buying it online, sometimes at a lower price. Online stores often offer lower prices than their brick-and-mortar counterparts because they do not have the same overhead cost. Staff writers at the Wharton School have observed that showrooming and buying elsewhere is not new in itself, but its impact has become more significant with the greater availability of online purchasing.
Omnichannel retail strategy, originally also known in the U.K. as bricks and clicks, is a business model by which a company integrates both offline (bricks) and online (clicks) presences, sometimes with the third extra flips.
The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.
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