Caveat Emptor? What about a refund instead?
Opportunity: An enormous “first mover advantage†in obtaining customer loyalty for retailers in Romania
Few retailers in Romania offer anything close to a formal policy of being able to return items in exchange for your money back. Some of my friends and colleagues here in Bucharest suggest that any store foolish enough to do so would be bankrupted in a matter of weeks as shoppers would simply borrow the clothes and return them shortly before the deadline; enjoying being on the cutting edge of fashion without the cash flow drainage. I would, however, suggest an alternate outcome - provided a few steps are taken - that could safely provide a huge opportunity for a local or international retailer with vision.
It should first be noted that a considerable force in American retailing is the buyers’ reliance on generous return policies that take the risk out of buying.
In addition….Rather than implement a “no questions asked†return policy, a retailer in Romania can first implement introduce a “frequent shopper’s†fidelity card that is linked to a specific shopper. Items eligible for return would have to be purchased using this card thus allowing the retailer to identify and exclude those they consider abusing the system. If a retailer is concerned with an individual holding multiple frequent shopper cards, the shopper’s identity could be verified using a government issued ID card to ensure integrity.
I will resist here the urge to provide a full case study on Nordstrom’s department stores but offer that Nordstrom sees a considerable amount of sales coming from those persons who came into the store to return an item…. You come in to return the pants you do not want and see a shirt and maybe a tie you can not resist. Add in the additional purchases from buyers who purchase too much assuming they will take one or two items back but never actually do… and the business case starts to look very good.
A proper return or refund policy would require arrangements to off-load the returned items that cannot now be sold as new. There are, however, many existing avenues in Romania that will buy up these items further helping to mitigate the costs of the program.
While the same old rules of retailing apply (price, selection, location…. ), a legion of loyal customers willing to pay a premium to take the risk out of shopping is waiting for a retailer to take this step. Imagine the public relations frenzy and “word-of-mouth†advertising that would follow the implementation of this local innovation.
Written by Steve
February 21st, 2007 at 7:01 pm
[...] This means that additional revenue can be obtained from existing customers by retailers that offer buy-back programs, as people bring in old equipment and leave away with new stuff (similar to the Nordstrom model, explained in an earlier post here). It also encourages new customers to buy, as their fears regarding long-term use and disposal receive an answer. [...]