The Retail Equation

The Retail Equation

I never knew about this, but maybe some of you were aware. Apparently there is a company called The Retail Equation that monitors your return activity in stores. If you have a high percentage of returns or return specific merchandise, you could be banned from returning product for up to a year.

The company was founded in 1999 and has grown in popularity among retailers. The company offers real time verification based upon a customers return/shopping habits as to whether or not they are fraudulently returning items based upon previous return habits:

Verify accepts/denies returns based on the consumer’s actions. A consumer will receive the same result regardless of which store is visited or who is working at the returns desk.

In milliseconds Verify detects consumer behaviors that indicate retail return fraud or return abuse. Only returners who exhibit extreme outlier behavior are denied.

Boasting that they only deny returns to 1% of the worst offenders, they believe that they are catching the "criminals" of the retail world. But at least in one case, that really isn't true.

Vina said the number the cashier gave her to call was for The Retail Equation, a nationwide company that keeps track of returns for a variety of retailers, including Sephora.
“The first words out of their mouth were ‘you are banned from returning anything to Sephora for a year,’” Vina said.
Vina said The Retail Equation told her she had too many returns but Vina thought that was unfair since she had spent over $575 at Sephora this year and returned only $32 worth of merchandise. In 2015 and 2016, Vina said she had no returns. ...

The other claim they make is that they can reduce retail theft by millions of dollars. Which, denying 1% of refunds would do that anyways depending on how big your corporation is. But that isn't the part I wanted to point out.

The part I wanted to talk about was how they have been able to build a data base based on our shopping habits, and are now capable of rewarding or punishing us for our behaviors. To know that your shopping habits are being tracked and monitored in such a way is pretty unnerving. No longer do you need to sign up and scan your "loyalty card" so they can track your purchases.

Our solutions review your customers’ past and current purchases and returns through any channel.
Consumers are recognized during the transaction even without a loyalty card.

I knew about targeted advertising. I knew they were at the point where they could track all your purchases and tailor fit your shopping experience to previous shopping habits. But I didn't know that they were able to reward/punish you based on your shopping behaviors.

To be fair, retailer theft has increased 1.44% since last year. The biggest area being shoplifting:

Inventory shrink includes:
Shoplifting/external (including ORC) = 36.5 percent
Employee theft/internal = 30 percent
Administrative and paperwork error = 21.3 percent
Vendor fraud or error = 5.4 percent
Unknown loss = 6.8 percent...

(note that this survey was sponsored by The retail Equation.)


Usually shoplifting leads to a return at another store for the cash. So, there is a concern there. To say there is no need to monitor fraudulent refund activities would be naive. But still, I don't know if monitoring a consumers shopping/return activity is really the answer. I don't like the idea of having all my purchases tracked and only being shown items that fit my shopping habits. I especially don't like the idea of being punished because I decide to return a few things.

Banned from refunding...who would've thought it?

The first link takes you to the companies website and the additional quotes can be found within it.

Thanks for reading!
blend57

a reply to: blend57


Ummm...Most of my shopping I now do online...

Yes...

I do fully support the Amazon monopoly...if only through my buying habits...

I admit to returning a few items...usually due to ordering the wrong size or part...totally my fault...
The retailers have always been fully supportive and professional...

I had to return a 3-D printer a week after receiving it...the replacement is humming along quite nicely...
Beyond that I never assumed that I could be penalized for returning items...although I don't make a habit of it...






YouSir

I only return things when I discover a mistake or a faulty item which very rarely happens. And even for faulty items, I wanted what I bought, so I am content with a replacement meaning the store still gets my money.

You'd be surprised at the number of people who buy stuff to use and then return (i.e., women buying dresses to wear to an event, keep the tag on and return). Until you run a business, you have no idea how a small percentage of customers can wreck havoc on your P&L. Businesses work diligently to figure out who these unprofitable customers are and try to avoid them like the plague.

You also have to remember that retail has very thin profit margins. The lady in the article claiming she spent $575.00 clearly doesn't understand this. So Sephora made say $5 in profit off her. Big deal. Her returns eroded any profit gained from her being a customer.

a reply to: blend57

Interesting information. I had no idea either.
I knew a woman years ago who was a chronic 'returner'. She was almost always under the influence of 'something' and would suffer buyers remorse after sobering up.
In a way, she was shoplifting. Some items she would wear a bit and then return them. It was bizarre behavior to be sure.
I don't imagine back in those days that the retailers she frequented used that service or she most definitely would have been on a list.
I would think the newer tags that some retailers are using has stopped a lot of the returns stemming from people buying outfits and only wearing once and returning to the store, though.

a reply to: Edumakated

Having worked in retail, I am familiar. My favorites were the ones who would pick up things through Goodwill after they'd been donated from severe markdown clearance and try to return them to the store proper.