REI’s generous return policy has earned it the nickname “Rental Equipment, Inc.”  For years customers have taken advantage of the return policy by returning a stroller just because a child outgrew it or returning a bike rack that didn’t match the paint of a new car.  The National Retail Federation estimates that return fraud accounts for $9 billion in losses for retailers annually.  In 2012, REI’s sales rose less than expected with only a 7% increase.  Starting this summer, REI will only take back merchandise within one year of purchase and 30 days for outlet items purchased on REI.com.   This change came as a result of a large uptick in returned merchandise that was over a year old.   The company was beginning to realize that this generous policy was not going to be sustainable in the long-term because of the increasing number of customers returning dated merchandise.

To reduce suspicious returns, REI is more insistent on proof of purchase.  REI believes, however, that most of its customers will be accepting of the new return policy as it is still more generous than most retailers.

Discussion Questions:

1. What was REI’s return policy, and what is it now?

2. Why did they change it?

3. Do you believe the change was warranted?

4. How do you think the change will affect their business?

 

SOURCE: Amy Martinez, Seattle Times, June 3, 2013