Fast Five Shorts | REI Goes After ‘Serial Returners’
In the latest edition of Omni Talk’s Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Avalara, Mirakl, Ownit AI, and Ocampo Capital Chris Walton and Anne Mezzenga discuss: REI Going After ‘Serial Returners’
For the full episode head here: https://youtu.be/UxDXVG9DOuQ
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Transcript
REI wants to stop serial returners.
Speaker A:According to Retail Dive, REI is now not accepting returns from a quote, small subset of its members who have repeatedly abused its return policies.
Speaker A:Normally, REI members would have up to one year to return most items, while non members have 90 days.
Speaker A:However, according to REI, a limited number of people have abused the company's return policy with an average return rate of 79%.
Speaker A:This particular group returned $2,400 worth of gear in the past year and $1,400 of that product was used, a spokesperson said.
Speaker A:As a result, while those members may still shop at rei, the company said they will no longer be allowed to make returns or exchanges.
Speaker A:Chris, something about this headline really spoke to you this week.
Speaker A:You were all in on it.
Speaker A:It was actually a was too.
Speaker A:This is their put you on the spot question.
Speaker A:So I want to know first of all, why this was so intriguing to you.
Speaker A:And then second, let get hit you with A&M's question, which is while on the surface this seems like a potential customer turn off policy, by the numbers given, this impacts less than 5,000 REI customers, accounting for about $12 million in returns and 3 million in non return sales.
Speaker A:With that in mind, Chris, does your mind go to why bother or does it go to why not?
Speaker B:Oh wow, 100% why not?
Speaker B:I mean those numbers, 12 million in returns, $3 million in sales, like that's, that's, that's, that's a huge delta.
Speaker B:Like no, I know, no, no amount of customers should be costing me that amount of money.
Speaker B:$12 million is a lot of money for people and a lot of money that can flow back in the operations.
Speaker B:So like, I don't know, I don't sneeze at that.
Speaker B:But.
Speaker B:So yeah, I think I'm all for REI doing this, but the reason I like this story, and if I step back 30,000 foot view of retail, I think it, it goes into showing us again as this is becoming a recurring theme on the show this year.
Speaker B:It shows you the power of data by way of a membership program, because REI is a membership program.
Speaker B:So it gives them the flexibility to take action like this because they know who those individual customers are.
Speaker B:So that gets me thinking.
Speaker B:Anne, we're hearing more stories about how returns are a problem.
Speaker B:More retailers are starting to charge for them even.
Speaker B:And so it makes me ask another question, which is with all these subscription programs coming online like Walmart plus, what angle do they start to take with returns?
Speaker B:Like, does a Walmart plus member get an extended return policy?
Speaker B:Do the windows get shorter for Non Walmart shoppers, or any loyalty program member, for that matter, at any retailer.
Speaker B:So the headline, to me, just presents, ultimately, a new canvas on rich retailers can paint something we haven't seen before.
Speaker B:And that's why I like this headline so much.
Speaker B:It gets my mind just going in new directions.
Speaker B:But I don't know.
Speaker B:I hope you don't rate on my parade on this one.
Speaker B:I kind of worried that you might, but maybe we'll just be friendly again on this show.
Speaker B:I don't know.
Speaker B:What's your take?
Speaker A:No, I mean, I think this is a definite.
Speaker A:Why not?
Speaker A:I mean.
Speaker B:Yeah.
Speaker A:Okay.
Speaker A:First, I was trying to consider, like, what are the cons here?
Speaker A:You have REI that's in an increasingly competitive space with Dick's Sporting Goods, Public Lands coming online and expanding their stores.
Speaker A:Bass Pro Shops kind of coming into favor with Next Generation of customer.
Speaker A:But I really don't think it's that big of a deal.
Speaker A:I think this is just some bad actors who have really screwed things up.
Speaker A:Like, it reminds me of being in Catholic school when one of our teachers, Sister Ann Marie, she let us chew gum, right?
Speaker A:But then some jerks in the class started putting it under church pews.
Speaker A:They put it under their desks, and they put it on Sister Anne Marie's chair.
Speaker A:And you know what?
Speaker A:Then we couldn't chew gum anymore.
Speaker A:So that's what happens.
Speaker A:And if you're going to abuse a policy like this, I think that this is just.
Speaker A:We're going to start to see, like you said, that we're going to start to see more retailers start to draw a hard line in the sand about their return policies.
Speaker A:And I think REI is in a unique position, like, from a PR standpoint, to be like, look, you can't return any things anymore, but you can go to REI resale.
Speaker A:And maybe if, like, if you're going to use these products for a year and then return them, like, here's an opportunity for you to get 10, 20, 40% back on that purchase by putting it into the resale program.
Speaker A:We're done with you.
Speaker A:Stop abusing our returns.
Speaker A:Like, I think.
Speaker A:I think that's what we're looking at here with this story.
Speaker B:Yeah.
Speaker B:And for all intents and purposes, REI's return policy, when you read it, is pretty dang generous.
Speaker B:So, like, they give you a lot of grace.
Speaker B:So.
Speaker B:So they're just basically saying, we caught you, your sister Ann Marie caught you, and you just got to deal with it.
Speaker B:So, yes, any Catholic school analogy is always wonderful, and nice job.
