In June of 2013 REI reduced it’s lifetime return policy to just one year – equivalent or lower than the manufacturer’s warranty. Citing the growth of abuse of the long time policy, REI decided to end it’s original 100% Lifetime Satisfaction Guaranteed Return Policy that attracted hundreds of thousands of high-end consumers who became loyal to the brand. What seemed like a small strategic change, tugs at the core of REI’s brand experience.
Now, aside from a positive to negative return line experience, the policy change has also made it easier for the once trusted high-end curator of fine recreational equipment to sell cheaper, lower quality goods for boosted profit margins. For fans trusting the store, it’s important to come to terms with this shift in strategy and to re-evaluate your relationship/loyalty to the store. Is this once consumer-champion brand eroding away into a corporate mediocrity? Will other high-end brands in adjacent retail markets follow REI’s lead?
How the Policy Shapes the Experience -No More Mr. Nice Returns
I encountered this new policy first hand when attempting to return a ruck (REI Flash pack) that snapped on first use (faulty). Although it was a return that was under a year, and was successful, the REI staff treated me (a long time member) much the way the customer service reps in the WalMart return lines do. I can’t be sure, but the accusatory and shameful sharp tones used during the exchange, as if I were guilty of something, seemed indicative of the new policy. It seems that as REI cuts costly customer benefits and struggles to compete with online retailers, the new return policy also comes with the edginess you’d find at a Wal-Mart return line. I’ve returned stuff to REI in the past met with a smile and easy attitude. And it was this surprising experience that kept me coming into the store vs. searching on Amazon for the exact product for 20-30% less than REI’s prices. However, the new style of engagement seems like it was directed from a soulless corporate playbook. I was left wondering what the value of brand loyalty really was.
Benefits of REI Membership
Cost: $20 lifetime – An easy investment for a lifetime of adventure.
Discount on Services, Adventures, etc. – I don’t use these much and many (like bike service) are inflated compared to other shops to begin with. I appreciate the convenience of finding them all in one place though.
Lifetime (Now 1 Year) Guarantee on Gear. You can return it without question or shame. This is what kept me coming to the store. It gave me one spot to return gear if it needed to happen. No need to ship things back and forth or wait forever. And NO ONE shamed you for returning an item.
10% Annual Dividend on purchases– an added bonus for spending with REI. However, it should be noted that there’s a bit of a lag time between when the dividend period ends and the checks are issued. They also allows earlier access to your dividend to spend in store credit. So this is really a marketing cost for REI.
Now let’s compare this to the modern online retailer, Amazon – the pinnacle for the consumer web retail experience.
Benefits of Amazon Prime Membership
Cost -$99 a year for membership
2 Day Shipping – Most orders Shipped in 2 days period, for free. I love this. Fast convenient and paid for in advance.
Access to Video Library – (I use occasionally in competition with Netflix). I point this out because it’s underutilized but greatly appreciated. Thats a win from an experience design perspective.
Access to Kindle Lending Library – (I rarely use but greatly appreciate). Again this goes up to the spirit of the brand and influences opinions of the brand as a whole.
Way Lower Prices – Prices often up to 30% lower than REI.
Standard Return Policy – Return Policy 30 days – plus manufacturer warranty (1-3 years for most gear). And they don’t shake their finger at you.
Bottom Line: If REI has the same return policy management tactics as a Wal Mart, same coverage as the manufacturer, inflated prices, it needs to offer more for it’s customers loyalty.
How the Experience Shapes the Brand
REI was originally a high end retailer that tantalized customers with a return policy that matched the promise of their brand – equipment that doesn’t quit. And for the longest time, REI was a curator of fine recreational equipment. You could trust that REI would carry only the gear that wouldn’t quit. REI had a vested interest in carrying only the finest gear. If they carried crap that only lasted a season it would cost them, and customers would return it. Now this new policy throws that brand narrative under the bus and has deeper implications into the REI customer experience.
That Dirty Unspoken Business
To boost its profits, REI is free to carry crappier gear (think Big 5-esque). It doesn’t have to insure it with a long-term return policy anymore and is free to carry products that last a short term and ensure higher profit margins. By placing lower quality gear next to high quality gear at a medium price point, it can increase profits. For consumers and REI fans, this means the exploitation of trusted relationships hard earned and built over decades with the brand.
This means paying a premium for gear that may only last a season – which is what most manufacturer’s offer. So there’s no longer an incentive for consumers to pay a premium. REI no longer has a vested interest in curating the finest gear for its customers and every reason to focus on fattening it’s bottom line. So… caveat emptor – let the buyer beware.
As a result, showcasing and shopping on Amazon has become increasingly more attractive when all is said and done. Amazon now offers what REI is stepping away from; an integrity in the brand and customer experience.
How REI can Redeem itself
It’s important to note that Amazon is starving out the competition by starving itself of profits. The low cost leader struggles to profit with its current strategy. This makes it even harder for the competition when it’s willing to forego profits. Recently Amazon raised prices on its prime membership.
However, tough competition doesn’t let REI off the hook for honoring the values and narrative of its brand. Here are some options it should revisit or consider. In essence it needs to add breadth and depth into it’s loyalty program.
Charge customers annually for membership -Amazon does it. Cosco does it. REI should take advantage of what leading retailers do.
Give us something for free– Provide Free Access to Trail Maps, Cheap Printed Versions via The REI App- (REI navigation via Google Wear)? Free sunscreen? 1 Free members only adventure of your choice per year (of a certain value)?
Address the return abuse directly and creatively
Extend Returns to 3 years – 3 years is still respectable and limits abuse.
Remove the Gestapo service in the return line – I have no idea what consultant wrote their policy, or which VP pushed this down to managers and employees, but the shaming attitude doesn’t belong in a high-end retailer.
Implement a system that publishes return “champions” to bring potential abusers to public light (let the public shame them). It could be added to the terms of service to post your name on a board somewhere. If you don’t care about your reputation, then by all means, keep returning gear after using it once.
Reward those who drive their gear into the ground. Celebrate them and their stories on the website. It sounds counterintuitive to reward people for wearing things out, but if REI is concerned with abuse, this is an easy fix. If it’s not truly abuse they’re concerned with – then they have a different problem; being disingenuous towards the public about its reasoning behind the policy changes. I really doubt that REI alone will convince a majority to use the same hiking boots for 10 years. It’s about as likely as getting a majority of whole foods shoppers to stop driving SUV’s. It’s not going to happen- so embrace the 1% of those who take care of and get full utility from their gear.
What do you think? Have you noticed a difference in your REI experience? Share your thoughts in the comments.