Make us your home page
Instagram

The sting of a liberal retail returns policy

Earnestine Gay, a longtime saleswoman at Macy’s in Herald Square, remembers returns that hurt her bottom line. 

New York Times

Earnestine Gay, a longtime saleswoman at Macy’s in Herald Square, remembers returns that hurt her bottom line. 

NEW YORK — Earnestine Gay, a longtime worker in the fragrance department at Macy's in Herald Square, clearly remembers a bottle of perfume that was returned recently. It was practically empty.

"There was maybe a spray left," Gay, 50, said.

Yet Gay knew that the bottle, bought weeks earlier, would probably lower her commission because it would count against her sales for that week.

The perfume's return was not terribly unusual. These days, people are returning goods in record numbers, and often in worse condition, encouraged by the flexible return policies adopted by e-commerce sites like Amazon and the brick-and-mortar stores trying to keep pace.

But unlike returns at online retailers, those at many department stores have a side effect: They can unexpectedly lower a worker's paycheck weeks or months after a sale is made.

"If you're thinking, 'This is my income for the week,' and then you find out a month later, 'Oh that wasn't my income at all,' you have to plan pretty far into the future," said Stephanie Luce, a professor of labor studies at the City University of New York.

Some of the country's leading department stores allow returns for as long as a year, like Nordstrom, or set no time limit at all, like Macy's. The commissions paid to sales representatives at Macy's can be affected by returns made within six months, while returns at Nordstrom affect workers for as long as a year.

These windows, union leaders say, are too long and fuel a culture of returns that has added instability to the paychecks of retail workers.

"Macy's used to have a 10-day return policy," said Ken Bordieri, president of Local 1-S, which represents Macy's workers in New York, one of the largest organized groups of the retailer's workers in the country. Macy's eliminated its time limit on returns, which had been six months, in 2010.

"When you have a return policy that says, 'We'll take anything back anytime,' well, then returns go up," Bordieri said.

The union, which provided the statements and arranged for the interview with Gay, says changing the return policy is among its priorities as it negotiates with Macy's for a new contract.

In an email, a Macy's spokesman, Jim Sluzewski, called the company's return policy "fair and equitable" to employees. A spokeswoman for Nordstrom, Tara Darrow, said in an email that "we provide our employees with a commission agreement when they are hired that explains how we calculate commissions, and they can always get a copy of the commission agreement."

For decades, department stores have used commissions as a way to motivate employees. Hone your sales skills, help customers and you, too, can share in the rewards. Returned merchandise has also long counted against an employee's sales, which are used to calculate commissions.

Such policies help protect retailers from some legitimate concerns. For example, it prevents an employee from trying to game the system by selling a product to a friend, knowing the product will be returned after a commission is paid. Mark A. Cohen, director of retail studies at Columbia Business School, said companies' commission policies can help stop employees from overselling products that consumers would be more likely to bring back anyway.

"It may create a distortion over a period of time," he said of the variable paychecks. "But at the end of the day, the sales associate is being compensated for their net sales, and that is a typical practice."

Still, the surge of returns has changed the dynamic. Online retailers, many of which have made generous return policies a prime selling point to shoppers — and which do not pay employees based on commissions — have led the push. Amazon, the world's largest virtual merchant, and many other e-commerce sites offer flexible and sometimes free returns.

"Online-only retailers have conditioned consumers to be able to touch and feel products and then return them if they change their minds, hassle-free," Kevon Hills, vice president for research at StellaService, a customer research firm, said in an email.

Americans returned $284 billion in merchandise in 2014, up 53 percent in five years, according to the most recent data available from the National Retail Federation, an industry trade group. Returns generally make up about 8 percent of overall sales, according to the group.

Department stores have among the highest return rates, according to the Retail Equation, which collects shopping data.

Worker advocates have had some success in changing return policies. In 2012, union leaders in New York pressured Bloomingdale's, which is owned by Macy's, to reduce the time employees could be affected by returns to 150 days from 180 days, and then to 120 days last year, according to a copy of the labor contract reviewed by the New York Times.

In 2011 and 2013, Luce, the CUNY professor, surveyed hundreds of retail workers as part of two separate studies and said that many said that they felt return policies had gotten too lax.

"We were pretty consistently hearing that for workers who had been in the industry for 10 or more years, they felt that first, your commission rates are smaller, and that this returns issue was more and more of a problem," she said.

Ann Pascarelli, 60, who works in Macy's luggage department and has been at the store for nearly four decades, would be one of those employees. She gets particularly worried when customers announce plans for a trip.

"We call ourselves the rental luggage department," she said.

"'I'm going on my trip tomorrow and I'll be back in a week,'" Pascarelli said, repeating what she said was an oft-heard refrain. "You can time it. In one week's time, they'll be back."

Macy's flagship store workers threaten strike

NEW YORK — Workers at Macy's flagship store in New York City are threatening to strike if there is no new contract by a midnight deadline. The store, a Manhattan tourist hot spot on 34th Street, hasn't had a strike since 1972. Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, which represents 5,000 workers including 3,500 from the store, said issues include health care, unpredictable schedules, and pension plans for senior employees. And liberal return policies, which have become crucial in the battle for consumers who are shopping online, have cut into worker sales commissions. Three other area stores may strike as well.

Associated Press

The sting of a liberal retail returns policy 06/15/16 [Last modified: Wednesday, June 15, 2016 9:26pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, New York Times.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Treasury secretary's wife boasts of travel on government plane, touts high fashion

    National

    U.S. Treasury Secretary Steven Mnuchin's wife, Louise Linton, boasted of flying on a government plane with her husband to Kentucky on Monday and then named the numerous fashion brands she wore on the trip in an unusual social media post that only became more bizarre minutes later.

    Steven Mnuchin and his then- financee Louise Linton watch as President Donald Trump speaks during Mnuchin's swearing-in ceremony as  treasury secretary in the Oval Office of the White House on Feb. 13. [Mandel Ngan | AFP via Getty Images]
  2. Ford, Chinese partner look at possible electric car venture

    Autos

    BEIJING — Ford Motor Co. and a Chinese automaker said Tuesday they are looking into setting up a joint venture to develop and manufacture electric cars in China.

  3. Judge throws out $458,000 condo sale, says Clearwater attorney tricked bidders

    Real Estate

    CLEARWATER — Pinellas County Circuit Judge Jack St. Arnold on Monday threw out the $458,100 sale of a gulf-front condo because of what he called an "unscrupulous" and "conniving" scheme to trick bidders at a foreclosure auction.

    John Houde, left, whose Orlando copany was the high  bidder June 8 at the foreclosure auction of a Redington Beach condo, looks in the direction of Clearwater lawyer and real estate investor Roy C. Skelton, foreground,  during a hearing Monday before Pinellas County Circuit Judge Jack St. Arnold.  [DOUGLAS R. CLIFFORD   |   Times ]
  4. Pasco EDC names business incubator head in Dade City, will open second site

    Business

    Pasco County economic development officials are busy reigniting their business start-up resources following the departure earlier this year of Krista Covey, who ran the Pasco Economic Development Council's SMARTStart business incubator in Dade City.

    Andrew Romaner was promoted this summer to serve as program director of the Dade City SMARTStart Entrepreneur Center, a start-up incubator service of the Pasco Economic Development Council. He succeeds Krista Covey, who relocated to Texas for another startup position. [Courtesy of Pasco EDC]
  5. Proposed Tampa tax increase prompts second thoughts about Riverfront Park spending

    Local Government

    TAMPA — Julian B. Lane Riverfront Park has a $35.5 million price tag with something for everyone, including a rowers' boathouse, a sheltered cove for beginning paddlers, an event lawn, a community center with sweeping views of downtown and all kinds of athletic courts — even pickleball! — when it opens …

    Expect the $35.5 million redevelopment of Julian B. Lane Riverfront Park to be a big part of the discussion when the Tampa City Council discusses Mayor Bob Buckhorn's proposed budget and property tax increase this Thursday. LUIS SANTANA   |   Times