Two ways to protect stores while prioritizing the customer experience

Retail fraud is rampant and growing more violent.

Roughly one-quarter (24%) of retail workers in 2023 reported an increase in individuals loitering in the store and 17% reporting an increase in organized retail crime rings. Return fraud in particular is a hot topic across retail. In fact, in the fourth quarter of 2023, the largest type of e-commerce fraud was refund/policy abuse, affecting 48% of merchants. 

This is indicative of a larger trend. Return fraud is becoming a bigger issue for retailers, and they are now adjusting their strategies to protect their stores. With the holidays upon us, major retailers are already putting strict return policies in place to mitigate risk. 

REI, for example, plans to ban a small fraction of frequent returners from any exchanges or returns at all. The hammer is coming down. But if retailers are focused on reducing return fraud, will they forget about the customer experience? The short answer is no, especially when they add AI into the equation.

AI-powered technology can actually help retailers ensure they find the right balance between the customer experience and protecting stores – it fills in the gap between the two. The technology can promote that balance in two ways: making the return process quick and efficient and freeing up associate time. 

AI makes the returns process quick and efficient

Shoppers want nothing more than a quick experience. If a shopper walks into a physical retail store specifically to make a return, they aren’t looking to browse the aisles and add items to a shopping cart; they merely want to check a box off their to-do list. If their shopping trip is held up by an unnecessarily difficult return process, customer satisfaction will certainly take a hit. 

When AI is working behind the scenes, the technology can enforce policies and flag unusual behavior. This decreases employee time and effort; store associates do not need to spend time making their own assessments and hold customers up.

For example, AI can automatically enforce the return policy that a retailer sets. The clerk only needs to scan the receipt and the system can do the rest, automatically flagging a situation as questionable and triggering the need for a managerial override. What’s more, AI can provide the clerk with the exact reason for the violation, allowing them to clearly communicate the reasoning with the customer. 

Automatic validation makes the return process quick and efficient and enables clear communication. Now, the retailer can successfully prioritize both the protection of its stores and the customer experience.

AI frees up associate time

With its ability to automate and speed up return policy enforcement, AI is also ensuring that store associates are available to provide excellent customer service across the floor and beyond. This is an added layer of efficiency; even the needs of shoppers who are not making a return are seen to by store employees. 

Say a clerk is trying to self-assess whether or not a return should be accepted, and they flag down their manager to help. The situation is now taking time away from two valuable store associates who could instead be on the floor answering shopper questions or up-selling and cross-selling products. 

When AI is used to automatically track and flag unusual behavior, both the clerk’s and the manager’s time is freed up. AI can even help alert the clerk that a particular customer has tried to return a different item every day for the past week. Not only that, but it can recommend to the clerk a specific action, removing the need for unnecessary manager intervention.  

Protecting stores and prioritizing customers are not mutually exclusive

Customers should not be casualties of a retailer’s efforts to fight return fraud, and as we explored in this article, they don’t have to be. 

Return fraud prevention solutions can help keep the return process effortless and intuitive, freeing up associates to provide excellent customer service while protecting the store in the background. As we look ahead to 2025, protecting stores and prioritizing customers finally do not have to be mutually exclusive.

Michael Jaszczyk is CEO of GK Software.