If you are expecting a necklace for Christmas, but wind up with a Foo Fighters t-shirt instead, you might want to suck it up, smile, and be happy with what you get because some retailers are starting to charge for returned items.
Even though gift receipt and store credit upon returns have been common ways to charge for returns, the winds are changing. When ConsumerAffairs spoke with Opher Baron, distinguished professor of operations management, at the University of Toronto, he said there are several retailers – especially fashion retailers – that are leading the charge.
Baron pointed to fast-fashion retailer H&M which said recently it plans to start testing a return fee to see how customers react. Zara recently added a fee of $3.95. JCPenney is charging a flat $8 shipping fee but has a more lenient in-store return policy, Abercrombie & Fitch charges a $7 fee and J.Crew deducts $7.50 from the return value.
“At DSW, for example, customers are charged $8.50 for a return unless they're members of the company's higher-tier VIP rewards programs, which require an annual spend of at least $200,” Baron said.
Retailers are tired of losing money – and consumers abusing the system
It’s not that retailers’ are turning into the Grinch. It’s just that times are as tight for them as they are for the consumer. Plus, returns are costly.
In the store’s mind, a return is either a lost sale, a hit the store has to take because the item’s value dropped significantly after the holidays, or it has to endure the cost of handling the return. That last part – the “reverse” supply chain – is a process many businesses don’t handle effectively, Baron said.
Baron added that there are also some consumers who abuse the current system and that the vast majority of returned items are not being resold. “In the end, consumers pay for returns one way or another,” he said.
What should consumers do under these changing circumstances?
“Consumers will get used to it because overall it should help to control costs,” Baron said, just like they got used to sometimes paying for shipping from e-retailers.
Baron’s advice to consumers is to be more cautious with their shopping and try to reduce their impulse buying of things they don’t really need. The biggest challenge, however, will be with purchasing clothes, mainly because of size and fit differences.
But, short term, Baron’s best bet for someone returning a gift is to ask for a gift card instead of a refund. Why? Because most retailers will issue gift cards without deducting a certain amount that they would otherwise charge for returns.