Deshopping in K-Mart and BigW

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26th May 2017 Marketing Reference this

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Fraudulent and consumer-driven issues that face discount department stores are not only found to be unethical acts of theft, price-tag swapping and use of items without purchase – but also deshopping. Deshopping is addressed to understand the ways in which it acts as a major threat to discount department stores. This is found to be the lack of detection and prevention involved with tracking deshopping and thus, in effect, retailers face problems such as lack of control over the situation, as well as brand and quality image and the obvious monetary costs involved.

It is recommended that the chosen retailers focus on the implementation of in-store and operational strategies that will aim to directly deter the opportunities for unethical behaviour and reduce the occasion for consumers to engage in successful deshopping practices. Long-term opportunities exist to implement a wider advertising campaign that will aim to educate consumers about the issue of deshopping and decrease its social acceptance. However short-term, the retailer’s key focus should concentrate on improving refund procedures and managerial/ personnel communication, staffing considerations and increased employee training.

Introduction

This report will examine the unethical consumer behaviour of retail deshopping within discount department stores. It will focus on key discount retailers K-Mart and BigW.

Discount department stores differ in their marketing strategy to normal department stores. Emphasis is instead placed on self-service, and the retail purpose is to sell products at a less expensive price point than traditional department stores. They are usually large mass merchandising chains, with clearly documented return policies, which are easily accessible to the customer. It is therefore easier for customers to familiarise themselves with these policies and know their rights for product return.

Often classified as anchor stores, these retailers have higher levels of consumer foot traffic which create a more hectic serving environment. Employees often have not enough time to concentrate on each customer and the relevance of the return. This makes discount department stores an effective environment for a behaviour called retail deshopping. It is an act where a customer buys an item, knowing already on the moment of purchase that it is going to be returned for a refund. This can include temporary use of the item before returning it, or simply buying the item for the temporary feeling of purchase satisfaction.

The following sections of this report will further outline the problem of deshopping in discount department stores, identify the type of consumer most likely to engage in the behaviour, address the factors that contribute to its successful practice, and finally offer practical recommendations for implementation by these retailers.

The Problem of Deshopping in Discount Department Stores

There are many fraudulent and consumer-driven issues that face discount department stores such as Kmart and BigW, existing in the form of unethical consumer behaviour. This includes the practice of theft where one in every twelve shoppers shoplift (Van Kenhove et al, 2003), price-tag swapping and the use of items in-store without a purchase. More recently ‘deshopping’ has been established as a form of retail theft by Resenbaum (2011) and has joined the ranks in unethical consumer behaviour. However discount department stores have failed to rectify the negative effects of deshopping and as such, deshopping is a major problem. This is due to the lack of control retailers have over deshopping in terms of proof and prevention due to customer service orientation. In extension, problems lie with brand image and monetary costs to the retailer as a result of deshopping.

Brands, such as BigW and Kmart, largely focus on the provision of good customer service and the offering of lenient returns policies (King et al, 2008). In doing so, these stores unintentionally foster the growth of deshopping as consumers perceive it do be easy to accomplish as there is no real consequence – King et al (2008). As such, the problem exists as discount department stores fail to keep a balance between customer service and implementing measures to discourage deshopping. Deshopping is also an act that is difficult to detect and prevent as consumer dishonesty and dissatisfaction is hard for the retailer to prove upon return. BigW and Kmart’s store layouts place the Customer Service Desks at the entrance of their stores which can ultimately decrease the quality image of the brand as levels of consumer dissatisfaction are displayed to potential customers within the vicinity of the store as deshoppers line up to return goods and argue until their item is returned (King & Dennis, 2006). The quality image is further harmed as goods can be returned dirty (such as make-up stains on clothing) or with minor faults that deem the items un-sellable to new customers and as such, also contributes to a loss of revenue to retailers which can be billions of dollars (National Retail Federation, 2007).

The Deshopping Consumer

Consumer psychology is a prominent factor in determining the typical department store de-shopper (Dennis & King, 2006). Demographic characteristics of the department store de-shopper are low to middle class individuals between the ages of 16 and 30 years old (Dennis & King, 2006). These consumers engage in the following behaviours while de-shopping:

Planned Behaviour

According to Dennis & King (2006), the practice of de-shopping is a planned consumer behaviour. The theory of planned behaviour identifies three main ideologies that influence consumers to engage in de-shopping (Dennis & King, 2006). These include attitudes, subjective norms and perceived behavioural control.

The attitudes of consumers towards different retailers affect the consumer’s decision to de-shop or not (King, Dennis & Wright, 2008). Consumers who shop at discount department stores such as K-Mart and Big W may demonstrate a lesser attitude towards such retailers based on lesser perceptions of low price brand image. Subjective norms define a person’s identity in society. A customer who shops at retailers like K-Mart and Big W may be influenced by others around them who also shop at those retailers. Consumers are influenced by what their peers say or do, and from observing other consumers at discount department stores (King, Dennis & Wright, 2008). Perceived behaviour control is indispensable in identifying whether or not a consumer continuously de-shops. Once a consumer de-shops the first time, the state of perceived behavioural control may lead to the consumer to belief they have actual control over the process (King, Dennis & Wright, 2008).

Unethical Behaviour and Illegitimate Complaining

The consumers lack of self-consciousness leads to consumers engaging in unethical behaviour without them knowing it. With no severe consequences for such behaviour, a consumer may believe they are not acting unethically (Harris, 2008). They see it as a perfect opportunity to exploit lenient return policies of discount department stores like K-Mart and Big W. De-shoppers acted unethically and illegitimately complained to the retailers and fraudulently return items in discount department stores such as K-Mart and Big W. The term illegitimate complaining refers to customers who make unjustified and false complaints to retailers although satisfied with the item (Harris, 2008). Piron and Young’s (2000) research suggests that there are five basic consumer needs behind deshopping; social needs, economic needs, personal satisfaction needs, professional/ job related needs and altruistic needs (Harris, 2008).

The Practice Of Deshopping

There are many opportunities for consumers to participate in deshopping within the chosen discounted department stores. Research by Rosenbaum et al. (2011) provides an insight into consumers reasoning behind the fraudulent act of deshopping. The findings suggest that the abuse of lenient return policies is the most common approach to deshopping. In recent years lenient return policies have led to an increase in fraudulent behaviour (Rosenbaum, M., Kuntze, R & Wooldridge, B 2011). BigW and Kmart offer liberal return policies, both stores define purchase satisfaction as the number one priority (BigW 2011) & (Kmart Australia 2011). Lenient return policies insure consumers against having regret after purchasing. In addition, liberal procedures increase the likelihood of consumer purchasing and are often promoted as an effective selling method. For the increasing number of people that attempt to deshop the consequence of doing so is poor.

In most cases deshopping can be difficult to identify, if it is suspected the common action by retailers is to ‘reject’ the item. By rejecting the item the consumer is unable to request for an exchange or refund, in Australia no legal consequence is given. In a recent survey 50% of the women whom participated admitted to deshopping because of the lack of consequences, most stated that is was simply ‘easy’ (Rosenbaum 2011). In addition, if rejected participants stated that they would persist with the return, targeting a different store and assistant.

Targeting young casuals and females during selected periods of the day is an additional tactic for deshoppers (Rosenbaum 2011). Young casuals are portrayed as inexperienced workers whom are easy to intimidate. Additionally, females are commonly recognised as passionate and considerate in comparison to there male counterparts. Deshoppers recognise these general stereotypes and target these people in vulnerable periods throughout the day; busy periods and closing times to mention a few.

Recommendations

The tightening of liberal retail return policies may seem at first the most plausible option for reducing the occurrence of unethical consumer deshopping behaviour within the industry. However, it must also be argued that such a change is not only costly to communicate to consumers through advertisement, external communication, in-store signage etc, but may also lie in juxtaposition to the projected brand image of the chosen retailers. As mentioned both Big W and Kmart differentiate their brand image based on low cost products and a friendly, accommodating customer service orientation (Big W, 2011; K Mart, 2011). This creates a low risk image ideal for the consumer and tightening the refund policy would only likely conflict with this brand message. It must also be noted that research shows the majority of deshopped items are returned based not on change of mind but rather fashioned ‘faults’ (Harris, 2008), as this reason for return is legally entitled to a full monetary refund. Therefore, tightening of the refund policy is only likely to discourage legitimate returns and feedback and lead to an increase in customer dissatisfaction which is more likely to cost the retailer in the long-term by way of negative word of mouth.

Instead we recommend a focus on in-store operations and strategies that aim to deter unethical behaviour and directly reduce the occasion for consumers to engage in successful deshopping. Opportunities for improvement and innovation exist in the areas of:

Refund Procedures and Managerial Communications

Internal and inter-store communication could be improved with the introduction of a comprehensive consumer refund information form, and innovative technology such as an intranet system which could be used to record, post and share this information. Trends on reoffending/suspected deshoppers, highly deshopped items etc would become apparent and therefore easier to address.

Employee Training

Dysfunctional or disloyal employees have been shown to facilitate deshopping behaviours (Harris, 2008). Regular staff training which emphasises the size of the problem, cost to the retailer etc should be implemented, along with clear ramifications for employees who are caught facilitating it. Customer relations tactics and procedures to exercise when processing a return should also be extensively addressed to ensure staff have the appropriate interpersonal skills to ensure customer satisfaction, whilst simultaneously obtaining the ideal outcome for the company (eg. offer exchange before return).

Staffing Considerations

Successful deshoppers have been shown to target casual or younger employees during busy or end of day periods when they believe the refund transaction more likely to be rushed through without extensive enquiry (Schmidt et al, 1999). As such, employee selection and shift length should be an important consideration when rostering. An alert, authoritative and proficient staff member should be seen to be handling all returns.

Wider Educational Advertising

A longer term opportunity also exists to implement a wider educational advertising campaign to heighten awareness of ‘deshopping’ and decrease its social acceptance.

Conclusion

The elimination of deshopping behaviour from discount department stores is an issue complicated by the legalities of consumer rights and risk of damage to the retailer brand image. This report has argued that acknowledging the existence of deshopping is of high importance for discount department store retailers, who need to be doing more to actively address the issue. Addressing how best to recognise the likely type offending consumer, and the common methods/ practises that are employed, will better prepare the retailer to handle the behaviour, reduce deshopping opportunities, and lessen the number of cases that ultimately affect the retailer’s bottom line. A long-term opportunity exists to implement a wider advertising campaign that will aim to educate consumers about the issue of deshopping and decrease its social acceptance. However short-term, the implementation of practical in-store and operational strategies should be a key focus, concentrated on improving refund procedures and managerial/ personnel communication, staffing considerations and increased employee training.

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