REI Eliminates Life-time Return Policy, Citing Uptick in Returns of Dated Merchandise
This article is about REI Eliminates Life-time Return Policy, Citing Uptick in Returns of Dated Merchandise. By the contribution of internal inconsistency and social media growth, an uptick in product returns at Recreational Equipment Inc. has prompt the retailer to eliminate its lifetime return policy last week.
It has been announced by REI that from June 4, returns would be limited to one year from the date of purchase except for the company’s online clearance where the return must be made with in 30 days of purchase.
When the company noticed unusual increase in return of merchandize more than a year old, the decision came forward, said Senior Vice President of Retail Tim Spangler.
“The customers are distributed across a broad range of ages, membership tenure and the markets they live in,” Spangler said to The B.O.S.S. Report. On asking, ‘What’s the reason behind the current growth?’ he further said, “I would probably navigate social media posts which is a flat platform to share stories and policies. Simply Google “REI return policy” and you will find a stream of interesting discussions.”
REIs “100 percent customer satisfaction guarantee” assured to put no time limits on items return. The guarantee aimed that if a product is not up to customers satisfaction, they could return it to REI for a refund instead of filing a warranty claim with the manufacturer. The guarantee does not include improper used or damaged items return. This factor has been the core component of REIs since 1938, the date of its founding.
REI Garage Sales of returned merchandize, shoppers have been abusing the policy by returning severely damaged items such as worn hiking boots, roof racks with missing parts, back packs and tents which has been used for years. Such abuse has frustrated REI employees and co-op members to joke about REI that it stands for “Return Everything Inc.” or “Rental Equipment Inc” and not Recreational Equipment Inc.
Sometimes, REI would prohibit customers who were consistently abusing the policy. But till date, REI managers insist that the goodwill outweigh any financial effect.
However, the digit began to turn in the year 2010, as more and more customers shared their experiences online. Now, social media is on fire with posts from REI customers debating the intent of its policy or even bragging about how they took its advantage by using items and returning it later such as baby stroller, mountain bike or tent.
In the last three years the number of customers who were stretching the policy beyond its intent became material,” Spangler said. “We have to watch our profit carefully if we are going to pay our members a dividend every year and we were reaching a point where it was hard to do both.
In March, $104 million was issued by REI in patronage dividends, or when REI sales reach $1.93 billion in sales around 10% of eligible purchases members made in 2012.
From July, the 2012 dividends can be redeemed for cash until Dec 31, 2013 and used as store credit until Dec 31, 2014.
According to Spangler, REI contributed to the issue by not elaborating its satisfaction guarantee intent to their store employees consistently. Therefore, it was common to hear from cashiers telling customers that the guarantee means any item could be returned for any reason, anytime, with no questions asked.
Well never have I ever heard people using the term ‘no question asked 20 years ago’, Spangler said. In order to align store teams around letting customers know what satisfaction is and also to properly attend that customer, we really try hard. It wasn’t like our execution was 100% consistent, we were inconsistent across our stores and also created some tough situation for our customers.