For years, REI’s generous return policy has earned it the nickname “Rental Equipment Inc.”
An Internet search of REI’s “100% Satisfaction Guarantee” turns up all kinds of stories about overused merchandise returned for a full refund or store credit.
There’s the mom who returned a stroller for no other reason than her children simply had outgrown it. Or the dad who took back an old bike rack because it clashed with his new car.
Starting Tuesday, REI will try to discourage customers from “renting” equipment for as long as they like by ending its policy of no time limits on returns. Customers will be allowed to take back store items for one year after purchase. The deadline for returning outlet merchandise bought on REI.com will be 30 days.
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Kent-based REI, which actually stands for Recreational Equipment Inc., made the change after noticing a sharp uptick in returns of merchandise more than a year old, said Senior Vice President of Retail Tim Spangler.
“We’ve always taken back products more than a year old, but to see that growing disproportionately caused us to ask some questions,” Spangler said in an interview last week at REI’s Tacoma store.
“What we found is that small group of folks who are probably extending the policy beyond its intent, is getting bigger. And It’s not a sustainable thing long-term if we want to maintain this fantastic policy,” he said. “It’s something we have to put some clarification around.”
REI’s sales rose less than expected last year to $1.9 billion, a 7 percent increase, while its profit dropped 4 percent to $29 million. The outdoor-gear chain laid off an undisclosed, “limited” number of employees in March, citing changing business needs.
To reduce dubious returns, REI also has stopped accepting returns without question and is more insistent that there be proof of purchase. Some REI stores had been known to give store credit, if not money-back refunds, to customers without a receipt, leading to the retailer’s other nickname, “Return Everything Inc.”
Climber Leif Karlstrom, in an article published online last fall by Outside magazine, recalled taking advantage of REI’s return policy as a broke college student.
“A climbing buddy came back from China with a bunch of knockoff REI gear. We returned it fraudulently to the store in Eugene, Ore., which gave us cash,” Karlstrom said. “REI didn’t even make some of the gear returned, but the store took it because the logo was on it. After that we couldn’t stop.”
The National Retail Federation estimates that stores lost $9 billion from return fraud last year, a slight improvement over 2011, said Richard Mellor, the trade group’s vice president for loss prevention. Mellor credits the small decline in losses to stricter proof-of-purchase requirements and closer tracking of customers who often return something without a receipt.
Spangler said he expects the vast majority of REI customers to be OK with the new rules. Already, about 90 percent of returns are made within a year, and REI will continue to take back defective products regardless of their age, he said.
“For 90 percent of our customers, this isn’t going to impact them. And for the other 10 percent, a good chunk are still going to be protected by this,” he said.
“If you buy that tent, and the seam blows out after two or three years, and you feel that it’s defective, I want you to bring it back and we’re going to take care of you,” he said. “We’re always going to stand behind our products not to be defective.”
REI will send out 3 million emails and talk to customers at checkout about the changes over the next few weeks, he said.
Even so, REI likely will remain at the liberal end of the spectrum for return policies. Seattle-based Nordstrom, also known for easy returns, has no deadline at its full-scale stores but a 30-day limit at its discount Rack chain. Target and Walmart give their customers 90 days to return most items.
In 2007, Issaquah-based Costco Wholesale began limiting returns on consumer electronics to 90 days. Costco said at the time its liberal return policy had become a free TV upgrade program, with customers taking back TVs once newer, cheaper models went on sale.
While Costco initially “heard a lot of noise” from critics about the change, “it didn’t affect their business,” Spangler said. “Within three months, it was a nonevent.”
REI customer Shaida Hossein, 26, of Seattle, said she has no problem with a one-year time limit on returns, calling it “more than gracious.”
Hossein returned a backpack to REI last September after being bothered by its shoulder straps on a hiking trip. “Even though I took the tag off, I was still able to return it,” she said. “It was just an easy, breezy return system.”
And because REI staffers questioned her about the return, she added, they were able to point her to another, better-fitting backpack.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org. On Twitter: @amyemartinez