Highlights - September 2016

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A meta-analysis of retail return policies recently published in The Journal of Retailing may help businesses modify their policies to increase sales and reduce returns.  The study by researchers at the University of Texas at Arlington is titled “The Effect of Return Policy Leniency on Consumer Purchase and Return Decisions:  A Meta-Analytic Review.” It reexamined twenty-two published studies concerning return policies across five different dimensions of leniency:

  • Time leniency (a sixty day vs. a thirty day return policy)
  • Monetary leniency (offering a 100 percent, money-back guarantee vs. an 80 percent money back)
  • Effort leniency (no forms being required versus forms being required)
  • Scope leniency (accepting returns on sale items versus not doing that)
  • Exchange leniency (cash back versus store credit).

The researchers discovered that return policies which offer consumers more monetary rewards are likely to increase their consumer purchases.

They also learned that businesses that want to curb or reduce returns should relax other aspects of return policies such as exchange leniency or scope leniency.

According to the lead researcher, “There is an inherent belief among businesses that lenient return policies increases product purchase.  While that is true sometimes, businesses must be wary of being too lenient.  This meta-analysis shows that retailers may be better served by creating more complex return policies that vary along multiple dimensions instead of just a few. ”

These findings offer vital context for future business decisions.  While most retail stores offer return policies, some offer more lenient return policies than others.  The inherent belief is that lenient return policies are more likely to lead to purchases than to encourage returns.

The team showed that the return policy factors that increase purchases are monetary and effort leniency.  That’s different from the return policy factors that influence returns.  The study showed that leniency increases returns while time and exchange leniency reduces returns.

Here’s an example;  During the Super Bowl season, you have quite a few consumers who purchase a big-screen TV for the...

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