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The point of no return? Restrictive changes to lenient return policies and consumer reactions to them

Huseyn Abdulla¹; Michael Ketzenberg²; James D. Abbey²; Gregory R. Heim²

¹ Department of Supply Chain Management, Haslam College of Business The University of Tennessee Knoxville Tennessee USA · ² Department of Information and Operations Management, Mays Business School Texas A&M University College Station Texas USA

Abstract Retailers face a challenging trade‐off in maintaining versus restricting long‐established lenient return policies. On the one hand, lenient return policies have become an important part of retailers' value propositions and play a significant role in stimulating consumer purchases. On the other hand, lenient return policies increase the volume of product returns, which hurts profitability. Motivated by observing an increase in restrictive changes to long‐established lenient return policies, we investigate consumer reactions to such changes and their managerial implications. Through a series of experiments with diverse consumer samples, we find that restrictive changes, such as shortening return time windows or introducing restocking fees, decrease consumer trust in retailers and lead to lowered purchase, positive word‐of‐mouth, and loyalty intentions. We also find that providing managerial transparency, in the form of communicating the rationale for restrictive changes, can attenuate the negative consumer reactions to such changes. Moreover, rationales that emphasize the cost of handling returns versus blaming opportunistic and abusive returners are similarly effective. Our findings contribute to the growing academic literature on consumer return policy design and provide actionable insights to retail managers.

DOI

10.1002/joom.1346

Volume

71 (1)

Pages

81-108

Language

en

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