Latest news with #consumerBehavior
Yahoo
5 days ago
- Business
- Yahoo
Do retailers make it too easy to return items? Why shoppers love lenient policies.
Returns of items are both a fact of life for retailers but also a difficult balance to maintain as they try to keep customers happy while not losing money. For consumers, lenient return policies play a big role in where they choose to buy. But then there is also the dark side of returns, with criminal rings set up to take advantage of those lenient return policies. Returns cost retailers a lot of money: total returns were expected to top $890 billion in 2024, according to a December 2024 report by the National Retail Federation. Retailers estimated that 16.9% of their annual sales in 2024 would be returned. But shoppers also say return policies impact where they shop: 67% of shoppers said a negative return experience would impact whether they would go back to that retailer. In a survey by Forter of 4,000 shoppers in both the United States and the United Kingdom, 68% said they believe retailers make it easy to abuse flexible return policies. In fact, 49% admitted to abusing policies in the last year. Another 29% said they use the policies to avoid paying full price. Thirty percent said they use and return expensive wardrobe items they otherwise couldn't afford and that number spikes to nearly half or 46% for younger consumers. More than half, or 58% also said they open multiple online accounts to take advantage of promotions. Retailers have to navigate how to please customers while not losing money on returns, said Doriel Abrahams, principal technologist for Forter, a software company that helps digital commerce brands block fraud. "Clamping down too hard on policies to curb abuse could turn away good customers," Abrahams said, adding that nearly 1 in 5 consumers in the survey said they've stopped shopping with a brand that initiated more strict return policies. "Ultimately, blanket policies – whether that's charging for all returns or having zero restrictions – are bad for business. The goal is to block abuse, not loyal customers, "Abrahams said. Lauren Beitelspacher, a professor in the marketing division of Babson College in Wellesley, Massachusetts whose research includes return policies, said she was not surprised that shoppers abuse return policies, but she was surprised that a significant number admitted to it. The numbers are probably even higher than the 49% of people who admitted to taking advantage of lenient policies in the survey, she said. "Returns have always been a problem, but since the pandemic, it's been really bad," said Beitelspacher. Return policies got very generous during the Covid-19 pandemic when shoppers couldn't go to physical stores and online e-commerce began to explode, said Beitelspacher. But with online e-commerce, comes the lack of being able to feel an item or try it on. "So in order for retailers to minimize the consumers' risk they offer that free returns and free shipping and people just went nuts and took advantage of it," she said. Some retailers started quietly dialing back their return policies or charging for return shipping or restocking fees during the holiday season of 2023, but they didn't make a big deal of it so as not to alienate their customers, said Beitelspacher. "Returns are a big cost for online retailers although, arguably, they are part of the price of doing business in the ecommerce space. The problem is that the consumer rarely covers the full cost of returns, so it harms the bottom line," said Neil Saunders, a retail analyst at the research and analytics firm GlobalData. Tighter policies around returns, such as making the consumer pay, helps offset some of the cost but it also deters customers and can harm sales, so there is a balance to be struck, he said. Social media is full of videos of moms who brag that they have taken a years' worth of used kid clothes from the Target Cat & Jack brand back to Target for a refund or exchange for new clothes. But some shoppers say it is up to the Target store manager's discretion. Are the shoppers who are getting refunds or exchanges smart consumers or taking advantage of a lenient Target policy? Target customers can return the Cat & Jack items or any Target branded item for up to a year with the receipt or proof of purchase in the Target app, a Target spokesperson confirmed. This guarantee is in place because of the confidence the retailer has in the quality of what it is offering when guests shop Target's owned brands, the spokesperson said. Some retailers don't even want the returned product back. An Amazon spokesperson said customers are allowed to receive refunds without returning some products as a convenience to customers. That is allowed on a very small number of returns and helps keep prices low for customers, the spokesperson said. Some shoppers have shared on social media that Walmart in some cases also allows consumers to return an item and keep it. The retailer would not specifically address that claim when asked, pointing to its return policy, which does not have any details about keeping a returned item. A Walmart spokesperson added that she didn't have anything to add on its return policy, but pointed to the retailer's return policy, which says on most items shoppers have 90 days to return. However, in an online guide for its Marketplace or online site, which includes sales from third-party sellers, Walmart offers tips on how those resellers can implement a "keep it rule," allowing customers to keep the returned item. Love 'em or hate 'em?: What's in store for the future of self checkouts? How retailers are pulling back. Beitelspacher, the marketing professor, said retailers will allow customers to return an item on the theory that "the delight that you might feel might make you more of a lifetime customer." The cost of that item to gain the lifetime customer would be more than the cost of absorbing the cost for you to ship the item back, she said. But Beitelspacher also pointed out that Amazon's lenient return policies, while it may help shoppers have better feelings about Amazon, can hurt the many third-party sellers on the platform, who are actually taking the return hit. There's a big difference between a shopper who takes advantage of a retailer's lenient return policy and criminals making a business of bilking retailers through returns – and consumers who participate. Some shoppers purposely buy an item and "wardrobe" it, or wear it with the tags on and then return it, which is arguably gaming the system, said Eyal Elazar, head of market intelligence at Riskified, a company that helps e-commerce companies detect and prevent bad behavior. But criminal rings also exist to defraud retailers and some consumers are participating in this fraud, he said. Real shoppers are using cyber criminals to handle the return process for them, but with a twist, said Elazar. The criminals scam the retailers using methods such as disappearing ink on return labels, which shows proof that some package was scanned in and on its way back to the retailer. When that package doesn't arrive, the criminal can put pressure on the retailer to still give the refund. The customer gets to keep the item and some of the refund while the criminal also gets a cut, he said. The criminals love this method since they don't have to put out any investment to buy stolen credit cards or stolen inventory and are still earning money from the fraudulent returns, Elazar said. This new return fraud really ramped up after the Covid-19 pandemic when people stopped needing to sign for deliveries and when retailers were trying to figure out ways to make consumers happy with the increase in e-commerce and returns, he said. Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at blinfisher@ or follow her on X, Facebook or Instagram @blinfisher and @ on Bluesky. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here. This article originally appeared on USA TODAY: Don't like an item? Why shoppers love lenient return policies Sign in to access your portfolio
Arabian Business
26-05-2025
- Business
- Arabian Business
UAE malls in ‘non-prime' areas could face pressure from Chinese goods diversion amid U.S. tariffs
Chinese goods facing higher US tariffs may increasingly be diverted to markets like the United Arab Emirates, a shift that could pressure pricing and challenge secondary retail locations first, experts said. The new U.S. tariffs imposed by Donald Trump could create 'ripple effects' throughout global supply chains that could eventually reach the UAE market, according to PP Varghese, Head of Professional Services at Cushman & Wakefield Core. 'While the UAE doesn't heavily import directly from the US, many products pass through complex international supply chains where tariff-related price increases get passed down,' he told Arabian Business. Secondary malls to feel the pinch first He added that Chinese goods facing higher U.S. tariffs might divert to other markets, including the UAE, which could increase supply and pressure pricing. 'We could see price increases of 5 to 10 per cent across various consumer goods categories within 6-12 months of full tariff implementation,' he said, adding that these rising costs could further influence consumer behaviour. 'The UAE consumer market is quite segmented, and we'll likely see different responses across demographic groups,' Varghese said, adding that expat consumers with fixed incomes, could become more price-conscious and selective in their purchasing decisions. The Cushman & Wakefield Core executive anticipates more deliberate shopping, greater use of discount platforms, and reduced impulse purchases. However, high-income residents and tourists may continue spending at current levels. 'Overall, I expect a shift toward more value-conscious consumption rather than a dramatic reduction in shopping activity.' This evolving behaviour could also influence retail real estate, with retailers reconsidering expansion plans or renegotiation of lease terms, if they 'face margin pressures from tariff-related cost increases,' he said. Secondary malls and non-prime retail locations could feel 'selective pressure' first, while flagship destinations like Dubai Mall and Mall of the Emirates are likely to remain resilient, Varghese said. However, at the same time, retailers are also responding to changing shopper expectations by embracing flexible payment solutions such as Buy Now, Pay Later (BNPL), which has emerged as a key tool to sustain consumer spending amid economic uncertainty. Buy Now, Pay Later a preferred payment method The rise of BNPL is another factor shaping the sector. According to Stuart Porter, a wealth coach based in Dubai, BNPL has become a preferred payment method for both shoppers and retailers. ' BNPL has grown quickly in the UAE because it helps shoppers stretch their budgets without relying on credit cards,' he said. 'For retailers, it's a simple way to boost sales during uncertain times.' Electronics, fashion, and online marketplaces are the sectors leading BNPL adoption. 'These sectors see higher conversion rates when BNPL is available at checkout,' Porter added. In addition, BNPL's popularity has also helped physical retail maintain its relevance. 'Retailers with effective BNPL integration typically report larger average basket sizes, which helps justify their physical store footprints despite higher operational costs,' Varghese noted. Tamara, a BNPL provider operating in the region, confirmed this in its 2025 business trends report. According to the company, '9 out of 10 shoppers say BNPL has improved their purchasing behaviour,' especially amid economic pressure. More than 50 per cent of UAE and Saudi consumers have reduced spending, yet BNPL is enabling continued shopping activity. The report also identified 'phygital' experiences — hybrid online and offline shopping — as a key trend. The Tamara survey found that 50 per cent of consumers visit stores to try items before purchasing online, underlining the importance of seamless integration across channels. 'Shoppers in 2025 expect the best of both worlds,' the report stated, with retailers encouraged to provide services like real-time stock visibility, click-and-collect, smart fitting rooms, and virtual storefronts to meet these expectations. Another major trend is mass personalisation. Businesses are turning to predictive analytics to deliver customised offerings. 'Predictive analytics may reveal that certain products, like black abayas, are most popular on weekends, allowing you to optimise your offers and timing,' the report noted. Aside from this, sustainability and brand values also influence consumer behaviour. '53 per cent of GCC consumers are willing to pay more for sustainable products, compared to 46 per cent globally,' the report stated, citing a rise in global searches for eco-friendly products. Due to this, retailers are reacting to these trends, with many of them 'diversifying their supply chains to reduce dependence on any single sourcing region,' Varghese said. 'Some UAE retailers are exploring increased sourcing from regional manufacturers less affected by U.S.-China trade tensions.' 'Others are adjusting inventory management to maintain price stability despite cost fluctuations – bringing in merchandise earlier or negotiating longer-term supplier contracts,' he added. Risk of overreliance on BNPL With inflation pressures nudging shoppers to spread costs, retailers and customers alike are beginning to view BNPL as a 'lifeline,' said Porter. For retailers, this keeps spending up without needing to offer discounts. Trump-era tariffs mostly affected U.S.-China trade, but ripple effects raised import costs globally. 'This made BNPL more appealing as it helped soften price hikes for consumers.' Retailers are using BNPL specifically to counter economic pressures. 'BNPL allows retailers to maintain customer demand even as purchasing power tightens. It's a tool to keep tills ringing in tougher times,' he added. According to Varghese, there could be long-term market distortion 'if BNPL creates artificial demand that isn't sustainable.' 'If consumers increasingly finance everyday purchases through BNPL during a period of rising prices, we could see household debt levels creep upward,' adding that the UAE's consumer credit reporting infrastructure 'is still developing, which could allow some consumers to overextend themselves across multiple BNPL platforms.' Despite this, Porter believes BNPL will continue growing — at least in the near term. 'Economic stress tends to fuel demand for flexible payment options, and BNPL meets that need,' he said. He expects more regulation, increased competition, loyalty rewards, and transparency over the next year. Varghese said prudent developers and landlords should remain cautious. 'Retail concepts that have become highly dependent on BNPL-driven sales could face challenges if regulations tighten or consumer sentiment shifts,' he noted. Luxury retailers, however, may remain insulated from some of these pressures. 'Luxury brands operate with fundamentally different dynamics than mass-market retail. Their customers are generally less price-sensitive, and these brands typically maintain higher margins that can absorb some cost increases without dramatically affecting retail prices,' Varghese said. 'The UAE's position as a luxury shopping destination is supported by tourism from regions where these same goods may cost significantly more due to taxes or import duties.' If prices continue to rise, some global brands might adjust their UAE strategy by introducing different product lines or adjusting their positioning 'to maintain market share despite changing economic conditions,' he added. In the longer term, the UAE's broader economic strategy could buffer against these headwinds. 'The real estate sector continues to mature and evolve in response to global economic shifts, not just reacting to them but increasingly setting regional trends,' Varghese said. 'Developers and retailers who recognise the changing relationship between physical and digital retail, and who can create value beyond just facilitating transactions, will continue to thrive regardless of tariff pressures. 'The UAE's advantageous geographic position and business-friendly regulatory environment provide significant buffers against global economic headwinds. Rather than viewing potential challenges as threats, forward-thinking market participants will find opportunities in this evolving landscape to create new value propositions for increasingly sophisticated consumers,' he added. Nevertheless, in the face of these challenges, flexible payment options such as BNPL are becoming essential for sustaining retail activity in the UAE. In the UAE, BNPL adoption leads the Gulf region thanks to high smartphone penetration, strong e-commerce growth, and a young, tech-savvy population – making it an ideal environment for BNPL compared to neighbours like Saudi Arabia or Qatar.
Wall Street Journal
25-05-2025
- Health
- Wall Street Journal
The Healthier the Food, the Faster It Goes Bad. Or So People Think.
A healthy diet is a goal for many consumers, but a recent study found something that can deter people from eating more healthy food: They worry about it spoiling. Consumers tend to believe that foods labeled as healthy will go bad faster than other foods, the study found, which could lead them to choose less-healthy alternatives in the store or throw out healthy food they bought that hasn't actually spoiled.
Khaleej Times
22-05-2025
- Business
- Khaleej Times
UAE: 44% of residents browse in-store but shop online, says report
Nearly half of UAE shoppers (44%) are turning to online platforms for better product choices, even after browsing items in-store, highlighting a major shift in consumer behavior, according to a new study by The report reveals a growing reliance on AI-powered shopping tools such as visual search, virtual try-ons, and intelligent chatbots, making the UAE one of the most advanced markets for digital shopping innovations. More than a third, 37 per cent, have utilised visual search AI to find products more efficiently. From virtual try-ons to AI-powered chatbots, the report cites that consumers in the UAE are more likely to engage with intelligent shopping tools than shoppers in other markets. "The data from this year's report clearly highlights the UAE residents' growing appetite for solutions that not only simplify their daily interactions but also meet the increasing need for convenience, security, and innovation in their shopping and payment behaviours," said Remo Giovanni Abbondandolo, general manager for Mena at "The UAE government has played a key role in fostering a digital ecosystem that enhances the convenience and security of online transactions. This proactive approach has laid a solid foundation for the widespread adoption of advanced technologies," he added. Cash-on-delivery plummets The UAE has one of the world's highest internet and mobile penetration rates, making online purchases smoother and faster, especially after the coronavirus pandemic. Furthermore, approximately 62 per cent of UAE consumers plan to increase their online shopping next year, with the categories most anticipated to benefit from increased transactions being travel, food deliveries, and government and public services. As more consumers embrace the convenience and accessibility of digital shopping, the preference for cash-on-delivery in the UAE continues to decline sharply. Since 2020, cash-on-delivery usage has plummeted by 53 per cent. Routine online purchases growing The study found that more consumers are turning to digital platforms for their routine purchases, with food delivery leading the way as the top-performing vertical, capturing a massive 57 per cent share of online purchases. In comparison, clothing and fashion came in second with 48 per cent online spending, and travel came in third at 38 per cent. It revealed that impulsive buying is no longer in the bag. "In fact, it might be an 'impulse inspiration' to look online. Retailers are adapting by embedding digital tools into physical stores, from QR codes for discounts to product previews powered by augmented reality," it said. The survey found that the country is a global leader in adopting Generative Chat platforms, as 46 per cent of shoppers have used these tools to enhance their online shopping experience. The report noted that the UAE stands out as a mature geography with widespread adoption of digital wallets and a growing market for investment apps, alongside developing peer-to-peer payment and digital insurance solutions. Around 42 per cent of UAE consumers are now using apps or digital wallets to send money at least once a week, and 35 per cent are using fintech platforms for investment and wealth management.
