STORES Magazine - February 2009 - (Page 52)

LPINFORMATION / RETURNS MANAGEMENT tomers who typically account for 99 percent of all transactions. Such a process makes it easier for a cashier directed by the program to decline a return to tell a customer, “I’m sorry, but our system says this return cannot be authorized.” The cashier can give the customer a number to call to learn why the return was declined and to appeal the process, if they choose. “By making it easy for customers to appeal a decline, management is able to provide a consistently high level of service,” says Mike Smith, senior vice president of loss prevention for Finish Line, a chain of 700-plus specialty stores that operate under the Finish Line and Man Alive banners. The system “takes pressure off the with return fraud, and the Verify-1 software applies sophisticated analytics to determine if such a pattern exists. For example, an individual might steal items from one store and return them to another store, claiming the sales receipt was lost. Or an individual might buy an item, leave the store with it, come back, steal the same item, and then use the receipt from the purchased item to ask for a return and their money back. At some future point, they might also return the purchased item, claiming they lost the receipt. Tied to customer ID By tying all returns to a customer’s ID, the software can review that customer’s returns history: If their behavior looks suspicious, the software, programmed ic customer ID, making it harder for them to cheat by faking a return. While Finish Line has exception reporting capabilities within its POS system that help identify internal fraud, the Verify-1 application “is a more pro-active way of identifying fraud,” Smith says. “If someone is tempted to commit fraud, then they may realize that it’s probably not a good idea to go there because they have to make up additional information to conceal the fraud.” Return Rewards After implementing Verify-1, Finish Line saw “a significant reduction in both returns and return fraud. Based on the annual reductions in our return rates, we had no problem justifying our investment,” Smith says. And reducing return rates “also means that we preserved some sales, so that positively affects your shrink rate as a percentage of sales,” he says. “So the system has an impact on our ability to reduce return rates and reduce fraud, both internal and external.” In addition to preventing bad customers from making fraudulent returns, the Verify-1 return authorization program can be used to reward good customers by issuing targeted incentives through TRE’s Return Rewards application. “That helps increase customer service and helps to keep more money in the stores,” Rittman says. Rittman cites research indicating that 54 percent of customers fail to make a new purchase at a chain within 18 months of returning merchandise. Retailers using Return Rewards, on the other hand, “often report that customers who return a single purchase, on average, wind up buying two items. They have a refund in hand and they have a discount incentive that they need to use within a certain time period set by the retailer, so they go and shop while StORES they are in the store.” Liz Parks is a Union City, N.J.-based writer with extensive experience reporting on retail, pharmacy and technology issues. WWW.STORES.ORG cashiers when they have to decline a return and also makes it possible for us to have one consistent returns process applied evenly throughout our stores.” Finish Line was scrupulous in selecting a returns software application that was easy for employees to use and easy for customers to understand. “We were most impressed by The Retail Equation,” Smith says. “We liked the extent of their history with their product, as well as their list of retail customers that were using it.” TRE’s Verify-1 collects ID information about customers — driver’s license, military card, etc. — and synchronizes that ID to the individual’s return activities. There is typically a pattern associated 52 STORES / FEBRUARY 2009 according to that retailer’s returns policies, directs the clerk to decline the return. Managers can override a decline if they deem it appropriate. More than 12,000 retail stores are using TRE’s services to significantly reduce fraud and the negative financial impact of returns by recapturing those refund dollars (lost sales) through incentive programs tailored specifically to honest customers who make returns. On average, Rittman says, retailers using TRE’s applications experience a 6 to 7 percent reduction in their annual return rates. He also points out that the software also discourages internal fraud because clerks and cashiers know they have to associate a return with a specif- http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - February 2009

STORES Magazine - February 2009 Contents Executive Editor's Page President's Page Are You a Pusher or a Puller? What Shoppers Think Online Retail Satisfaction 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Cover Story - Something’s Got to Give First Look Concept2Watch Online Partners Merchandising Sustainability Inventory Systems Drug Store Systems Business Intelligence Inventory Managment Online Marketing Supply Chain - Better Data, Better Decisions Returns Management - Identifying Fraud Data Security - Securing Intimate Data Anti-Shoplifting - Mall of Shame? Risk Management - Securing Consumer Confidence Loeb Retail letter ARTS Update Point of View NRF News Retail Crossword Retail Industry Calendar End Cap

STORES Magazine - February 2009

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