© January 2017. The Retail Equation, Inc.

A major retailer asked The Retail Equation/Sysrepublic to discover:

“What impact do return policies have

on our profits?”

A portion of corporate decision makers wanted to significantly tighten the return policies in order to reduce the return rate, while others wanted more generous return policies.

of the stores were designated the

CONTROL GROUP

of the stores used FRIENDLY POLICIES

1/3

For 6 MONTHS the stores were divided into 3 groups:

of the stores used STRICT POLICIES

1/3 1/3

“Strict” stores enforced policies like “no receipt, no return”, which affect all shoppers.

“Friendly” stores used statistical models from TRE to detect and deter only the worst one percent of returners.

STRICT friendlyVS

SEE THE RESULTS

▼

The negative impact of strict policies was clear.

NRNR Net SalesOne Year Rolling Total

$15,500,000

$15,700,000

$15,900,000

$16,100,000

$16,300,000

$16,500,000

$16,700,000

$16,900,000

2012_01

2012_03

2012_05

2012_07

2012_09

2012_11

2013_01

2013_03

2013_05

2013_07

2013_09

2013_11

2014_01

2014_03Months

Rev

enu

e

Deployment Date

The control group saw returns increase 2 percent.

Meanwhile, both test groups decreased the return rate by more than 7 percent.

But there was a difference…

Stores with a friendly policy sold nearly 9 percent more than STRICT stores!

Why is that?

Friendly policies are a sales magnet.

Consumers consider the store’s return policy before they purchase. Strict policies drive away business and harm net sales.

A large chain could lose hundreds of millions —even billions—in revenue each year!

Want to see the details? Download The Retail Equation/Sysrepublic’s white paper “How Strict Return Rules Can Decrease Retail Revenue.”

This research and white paper were presented by Adi Raz and Daniel Downs at the ASIS conference.

Download White Paper

© January 2017. The Retail Equation, Inc.

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