Costing buyer's remorse
Recent weeks have seen reports emerging of an unfortunate aftermath to the much hyped launch of Target's Stella McCartney designed range. In a saga that appears to be taking on the status of a cautionary tale, the Sydney Morning Herald noted Target had marked down its 'Stella' designs by up to 60 per cent in order to shift remaining stock, not a good look for a celebrity designer range.
The current anticlimax seems a world away from the white hot heat surrounding the launch on March 12, when women flooded Target stores, their interest piqued to fever pitch by an unrivalled publicity storm. "Buy Stella McCartney for Target or regret it forever" seemed to be the message. After the furore however, something unexpected happened; a palpable chill descended. Stories emerged of shoppers realising they had overspent, buying hundreds of dollars' worth of product, much of it allegedly destined for re-sale on eBay (unsuccessfully as it transpired; the online sales engine reported only a fraction of 'Stella for Target' product on its site was sold). Meanwhile, of those shoppers who had bought the label for themselves, many realised the garments didn't suit them in the cold light of their bedroom mirrors. They also felt reluctant to don outfits that, clearly gracing thousands of other wardrobes, had suddenly lost their unique designer allure. And so it was that the buying fever turned into a returns fest.
Following the launch, Target took the remaining stock from 100 stores across the country and consolidated it into 35 metropolitan stores, running selected radio and press advertisements pushing the "last chance to own Stella McCartney for Target clothing" line. But more than two months after the initial launch embarrassing amounts of stock remain unsold. Australian Centre for Retail Studies (ACRS) executive director Jeff Rogut recalls the unfolding drama.
"I happened to go to Target Chadstone on the day of the Stella McCartney launch to see what the reaction was to the campaign. The frenzy of shoppers taking merchandise off racks and straight to the checkout seemed even at that stage to indicate that there would be returns. Unless the strategy's success had been underestimated, one would imagine that this scenario would have been foreseen, planned for and costed into the price of the garments."
Target would not be drawn on estimating the cost of 'Stella for Target' returns and the retailer's corporate affairs advisor Daniel Ellis resolutely defended the range, refuting claims the reason for the returns was customer dissatisfaction with the label's styling.
"The range was designed to be generous in terms of the fit, which is consistent with the look of Stella McCartney's own range and in tune with current fashion trends."
While the success of the launch has undoubtedly been mixed, Target need not defend itself too hotly, however. Ironically the reason for many of the returns seemed to be the success of the campaign itself, which saw stores so crowded that shoppers could not fit into Target's changing rooms and therefore purchased 'on spec'. Nevertheless, the case does highlight a disquieting tendency for consumers to make impulse purchases on the assumption that they will be able to return them no questions asked, raising an important question for retailers: how to avoid exploitation by consumers while maintaining high levels of service?
Duncan Shaw, executive director of the Australian Retailers' Association (ARA) at the time of writing (prior to his resignation on May 1), claims returns policies are increasingly "dictated by different retailers' strategies and target demographics", the hallmark of a highly competitive, increasingly segmented market.
This view is borne out by independent Melbourne eventwear retailer Rosemin, which sells both "off the peg" and made-to-measure garments. Rosemin's policy is in tune with the highly personalised nature of its offer, confirms company founder Rosemin Kim, who says returns are kept to a minimum "by working very closely with customers in the first place".
"In rare cases where returns are necessary, the customer leaves the garment with us for assessment. Within 24 hours the customer will be notified regarding whether they will receive a replacement of the item or the opportunity to receive a credit note. It is critical to meet the customer's needs and keep them happy, so the process does not end until the customer is satisfied," she says, adding customers are made fully aware of the policy early on in the transaction.
Meanwhile as a small, non-vertical chain, Melbourne youth retailer Edge Clothing - which operates eight outlets across the Victorian capital selling a spectrum of street labels including Ladakh, Lee, Wrangler, Nobody and Industrie - must work within certain constraints, confirms Edge marketing co-ordinator Nancy Wang.
"Our policy is very much dependent on the decisions made by our suppliers. At the discretion of our suppliers we offer a refund, exchange, repair or credit on merchandise that is faulty, significantly different to that shown to the customer, or not doing what it's supposed to."
While customer friendly returns policies are crucial to ensuring a "positive brand image and customer return and loyalty", some limits to retailers' obligations are also necessary, she adds.
"The down side of a more lenient returns policy is obviously the cost to the company; and a lot of the time the cost of lenient returns policies is accentuated by customers exploiting them."
At the big end of town, a Myer spokesperson claims the retailer's current returns policy is designed to be "both fair to our customers and fair to Myer", adding, "customers can shop at Myer with confidence knowing that Myer can offer repairs, exchanges and refunds".
But while larger retailers are widely perceived as more lenient - many of them even sharing the "cost pain" of returns with their suppliers - even department stores have shifted towards increased stringency on returns in recent years, claims the ACRS's Jeff Rogut.
"There was a time when Myer was famous for its excellent returns policy, which allowed customers to return goods even without proof of purchase, as long as that brand was stocked in Myer. Myer tried to change this in the late 1990's and early 2000s and it became much more bureaucratic, so they lost a strong element of the customer guarantee that they stood for." Myer later reverted to a more lenient stance, requiring proof of purchase while cutting much of the red tape out of its returns system, although it remains to be seen whether this will alter following the retailer's ownership change last year, Rogut adds.
While the ARA's Duncan Shaw claims "the majority of customers do not abuse returns policies", Rogut claims increased consumer clout and a highly saturated market mean a realistic approach is advisable. "Retailers large or small need to strike a fine balance between protecting themselves from exploitation while maintaining consistently levels of service. The best way to achieve this is to specify refunds policies clearly at point of sale and ensure staff are aware of their obligations."
Australian retailers should also learn from their US counterparts.
"US fashion retailer Nordstrom is often referred to as a pinnacle of customer service and, in particular, returns effectiveness. The positive effect this has on its overall brand image is not to be underestimated."
Nordstrom's rigour is founded in the unprecedented ability of consumers to disseminate experiences both good and bad via internet blogs and other web-based means, he adds.
"In this age of customers seeking greater levels of immediate satisfaction and taking complaints very public if they are disappointed, it is in retailers' interests to offer expected services in an efficient and pleasantly memorable manner.
"Retailers need to ensure the efficiency of returns mechanics and assess the costs to their business - what are the real costs of returns, and how can those costs be minimized without being negatives for their customers? A great shopping experience may be ruined and customers lost if a genuine return is poorly handled; unfortunately we all have some experiences of this."