Is this any way to treat a guest?
Target Corp., noted for its superior customer service, has ratcheted back its comparatively lenient return policy. The Minneapolis-based discount retail chain, which refers to its shoppers as “guests,” now requires customers to produce receipts for any return over $40. That is down from the previous ceiling of $100.
And, in August, Target will lower it even further to $20. Other big-box discount retailers including Wal-Mart Stores Inc. may follow.
The move could diminish one of the core tenets Target has been credited with: customer service. At the same time, it removes one of its major points of differentiation in a crowded and fiercely competitive field of discount retailers. “I'd look at it (the previous $100 return policy) as a strategic advantage,” says Howard Davidowitz, chairman of Davidowitz & Associates, a New York City-based retail consultancy and investment firm.
When a customer takes the time and effort to come into the store with a return, they will never forget if they feel cheated because it was not handled properly. “If you handle it well that retailer will have the customer spending their refund at the store during that visit,” he says.
Industry observers say Target is merely joining the growing pack of retailers, including Costco Wholesale Corporation, Best Buy and Wal-Mart, looking to reduce the millions of dollars lost every year through deceptive returns (shrinkage). Target declined to comment.
During a first-quarter conference call with analysts last month, Wal-Mart's CEO for the USA, Eduardo Castro-Wright, cited how the world's largest retailer saw pressure on gross margins during the quarter from higher shrinkage. Wright said, “We are concerned about shrinkage and are investigating the cause and taking steps to correct it.”
Patricia Edwards, retail analyst with Wentworth, Hauser and Volich, a Seattle-based money management firm hints Wal-Mart could be next to tighten its return policy. “I am not sure they will leave their return policy as it is,” Edwards says.
For several years, Wal-Mart has accepted returns at its more than 4,000 stores without a receipt; no questions asked. However, there is a limit according to Jami Arms, a spokeswoman for Wal-Mart.
Arms says, in the event that a customer has returned more than three items without receipts within a 45-day period, the cash register system will automatically flag the transaction, and a customer service manager or member of management must approve the return.
Wal-Mart gives customers the option of a cash refund if the purchase was under $25, a shopping card for the amount of the purchase if it was over $25, or a credit to the customer's credit card or an even exchange for the product.
Back over at Target, the tightened restrictions on returns without a receipt are expected to impact less than 5 percent of its customer base, according to an industry expert.
Stan Pohmer, CEO of the Pohmer Consulting Group in Minneapolis says, “this really only impacts those who pay by cash and then those who don't retain their receipt.” A former buyer for Target, Pohmer notes, the vast majority of purchases made at the discount chain's more than 1,100 stores are with a debit card, credit card or check. Therefore, the store has the technical means to retrieve receipts for purchases made with those forms of payment.
While the return policy is a significant element in the retailers' overall customer service, which industry analysts say can influence purchasing decisions, they say the change in Target's return policy alone won't drive customers to another discount retailer.
“I don't know if that in and of itself will pull customers from Target to Wal-Mart,” says Edwards.
ICSC Taps Tremblay
The ICSC elected Rene Tremblay to serve as the chairman of the association for the 2007-08 term. Tremblay, who is president and CEO of Ivanhoe Cambridge based in Montreal, is ICSC's 48th chairman. He succeeds John Bucksbaum, CEO of General Growth Properties in Chicago, Ill. Tremblay is the sixth Canadian to head the organization and the first ICSC chairman whose company owns and operates shopping centers globally. He said, “In the course of my mandate, I intend to further develop the ICSC's reach by encouraging the development of new relationships and networks around the world.”
Boyd Joins GGP
Boyd Gaming Corp. has entered into a partnership with General Growth Properties to develop the retail promenade at Echelon Resort on the Las Vegas strip. The 300,000-square-foot retail complex will cost $500 million. Boyd will contribute the air rights to develop the promenade, and GGP will ante up $100 million, creating the 50/50 joint venture. The upscale retail center will boast boutiques, shops, restaurants and cafes. It will bolster GGP's Las Vegas portfolio, which includes Fashion Show mall, the Grand Canal Shoppes and the soon-to-reopen Shoppes at the Palazzo, both at the Venetian casino, and the 1.2-million-square-foot Summerlin Centre, which opens in 2009.
Taubman Centers will offer shoppers at its upscale malls a relaxing lounge featuring Sharp Electronics' AQUOS full HD LCD televisions. The AQUOS Entertainment Lounges are set to debut this summer at 10 Taubman shopping centers across the country. This is Sharp's first national alliance with a shopping center developer. Each lounge will feature as many as three AQUOS televisions, with screens up to 65 inches, tuned to news, entertainment and live sports. According to David Goldberg, Taubman's vice president for marketing and sponsorship, Sharp is helping create a relaxing area for shoppers to take a break. The shopping centers to house the lounges will include Beverly Center, Los Angeles; Cherry Creek, Denver; Dolphin Mall, Miami; Fair Oaks Mall, Fairfax, Va.; International Plaza, Tampa, Fla.; Northlake Mall, Charlotte, N.C.; and the Mall at Short Hills, Short Hills, N.J., among others.
Continental Environmental Redevelop-ment Financial (CERF) is a new company that aims to provide financing for developers building commercial property on contaminated sites. The firm, which had a coming-out party at the ICSC Spring Convention, offers specialized debt financing to commercial and residential site owners, real estate developers and public entities for brownfield cleanup and redevelopment. The CERF loans, up to $100 million, can be used for site acquisition, cleanup andconstruction. The National Brownfield Association notes CERF's financing will allow brownfield projects to be leveraged like traditionally financed real estate development projects. CERF financing is exclusively for brownfield redevelopment, therefore, unless the site is contaminated, it is not eligible for the loan product.