Some executives are never short on opinions. Asked for his thoughts on the divide between in-store and online return policies, Bud Konheim responded with a mini epistle.
Nicole [Miller] and I have run our company since 1982 without manuals, bureaucratic boards or business school type organization. Most of our policies are formed by our own trial and error, occasionally adopting a business idea from an outside source that we think is worthy. Our return policy is one of those policies that developed from the opening of our first boutique in 1986.
In 1986, department stores dominated the retail scene and they had just started to feel the competitive pressure of “too many stores” (Sandy Parker’s WWD interview October 1976 — “The Country Is Overstored”). Part of their attempt to win customers was to adopt an “anything goes” policy of accepting returns. This led to widespread abuses like buying a dress for Friday night’s date and returning it on Monday for a full cash refund.
Our boutique was organized to counter the growing impersonality of these department stores and to take special care of each customer — fitting each one carefully, accessorizing them and giving them confidence in the look that they were buying from us. All that special attention costs time and money leading us to our original store policy of no returns.
Because we were also selling some of the department stores the same styles, eventually we had some customers that would spend time in our boutique and then choose to buy the identical style in a nearby department store. That competition and feedback from our salespeople caused us to change our return policy to today’s exchange accommodation.
E-commerce is another new retail idea that is growing and competing rapidly. Since we still indulge our boutique customers with the above special service we end up getting very personal with our boutique “trade.” The e-commerce customer in general is more like department store “traffic” versus trade and does not get or care about the personalized service. They will buy two or three of the same outfit relying on their ability to easily return two of the three that don’t fit or all three of the fabric is not what they expected from the picture.
This presents the same problem as the loose department store return policy versus our boutique’s and we have a little bit of the same problem. We deal with it on a case-by-case basis and give the boutique managers wide authority to adjust the policy based on common sense.
What is evolving is the general business model that our industry has accepted for 100 years. Department stores that began as giant downtown emporiums grew and spread out to multiple suburbs each one losing touch and forgetting the specialness of their customer. They compensated first by staying open on Sunday, then all night long and 5 a.m. on Friday post-Thanksgiving. Then came the “sure” competitive winner — the discount wars and the race to zero.
To survive — and eventually thrive — and to finally complete the answer to your question that I think I understand, we developed a program of “boutique exclusives” that let every boutique buyer know that 60 percent to 70 percent of every line would not be sold to a store with more than one location. This two-year-old strategy has resulted in positive feedback and increased sales to 1000-plus boutiques that no longer have to worry about the styles they buy from us being offered at a discount at the same time as they offer them at regular price.
Sorry my answer got overdone, but I got very interested in your question and it’s early in the a.m. We are very passionate about the industry. We have made decisions based on our common sense that has conspired to keep us from growing out of control.