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Holiday cheer can end with returns

Liberal exchange rules are becoming a thing of Christmas past as stores squeeze profits and promote gift cards.

By MARK ALBRIGHT
Published December 29, 2005


Martin Baxley wanted a refund on the Candy Crane Machine he had bought at half-price for his nephew for Christmas. The battery-powered crane didn't scoop up sweets as promised.

But the managers at a St. Petersburg Toyopia store were adamant: no refunds on electronic toys. Besides, they said, the small print at the bottom of their full-page "Blowout Sales" ad, a store cash register sign and receipts all caution: "All sales final."

"You'd think they would at least take something back that was sold broken," said Baxley, a 42-year-old postal worker. "This is ridiculous."

Nope, replied store manager Jules Garcia. "Final means final. How do we know what he did with this toy after he left the store?"

As the holiday shopping season grinds through its final week, retailers eager to rescue a so-so season have shifted gears. They're catering to crowds clamoring for clearance goods, enticing gift card-carrying shoppers with new goods at full price, and arguing with testy customers over ever-tightening refund and return restrictions.

"I'm expecting an influx of complaints about the tougher restrictions on returns and gift cards," said Doug Templeton, an investigator with the Pinellas County Justice and Consumer Protection office. "People don't always read the fine print. Unfortunately, except when there is a written policy, interpretation is pretty much up to a store's discretion."

Toyopia's Garcia said he has summoned police three times this week to escort away upset shoppers turned down for price adjustments they thought they deserved.

Gift cards are part of the reason for the tougher stance on returns and refunds.

"Retailers have used tighter refund policies to force people away from returns and convinced them gift cards are a better alternative than buying gifts people don't want," said Britt Beemercq, president of America's Research Group, a Charleston, S.C., company.

Since gift certificates were digitized as gift cards, return rates have dropped dramatically. A decade ago, 38 percent of all holiday gifts were returned for refunds or exchanged. This year it's only 14 percent, according to America's Research Group.

Tighter refund policies also help stores dramatically cut costs, fight fraud and fatten profits.

The battle at the refund desk is part of the next chapter in the unfolding story of what is emerging as a mediocre holiday sales performance for retailers.

Consider two estimates released Wednesday, both tracking sales through Christmas Eve. Redbook Research, which follows apparel chains, estimated that sales for November and December are up a modest 4.5 percent so far. The International Council of Shopping Centers said sales in stores open more than year were running 3.9 percent ahead of last year's pace for the season in 75 chains it monitors. The final tally doesn't come out until mid January.

But the early trends would translate to overall general merchandise sales running short of the National Retail Federation's forecast of a 6 percent gain in sales to $439.5-billion.

Online retail holiday sales, still a small slice of the pie, soared 24 percent to about $17-billion between Nov. 1 and Dec. 12, according to comScore Networks. That would be less than 5 percent of all general merchandise sales for the two-month season.

Once a time to deeply discount seasonal goods and clear space for spring merchandise, the week after Christmas has morphed into an important sales week in its own right. The popularity of gift cards is a driving force.

"Stores see redemption days as "Phase 2' of the holiday season when fresh merchandise is needed to spur additional sales," said Michael Niemira, chief economist for the shopping center council.

Retailers expected to sell a record $18.5-billion worth of gift cards in the last two months of the year, about 6.6 percent more than they did last year.

Retailers cannot count gift cards as revenue until they are cashed in, so the week after Christmas has grown to account for almost 10 percent of sales for the entire season.

Stores are beginning to track returns from customers; some repeat customers now need a manager's approval for a return. Many stores will accept returns for 90 days after purchase, but only accept goods for exchange within 30 days of purchase. Sometimes stores will refund goods bought at full price weeks ago only for the same product's latest sale price.

Electronics chains routinely charge a 15 percent restocking fee to take back computers and cameras if the packaging has been opened. Many stores refuse to take back DVDs or video games that have been opened.

Gift cards frequently come with fees that eat into the face value of the card. Target will not issue refunds for its own gift cards.

Few retailers issue cash refunds without a receipt anymore. Consumers have noticed. A retail federation survey found that nearly half of all shoppers tucked a cash or store gift receipt into packages they gift-wrapped this year.

Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified December 29, 2005, 00:52:13]


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