Why retailers won't let us buy in peace
Going to some stores these days is like running a gantlet of offers for extended warranties, store credit cards, loyalty clubs and trial subscriptions to magazines.
Even though a customer in the adjacent line happily gave their digits, we, unable to quickly recall a fake phone number from The Rejection Hotline, merely explained that we'd rather not.
The moment felt far more awkward than it rationally should have. After all, no good can come from giving our home phone to a shoe store. "Hi, Joe, this is Payless . . . look, we're moving next weekend and we were wondering if you could swing by to help? We'll have pizza and beer!"
Is it really too much these days for us to just be able to shop in peace? Why is it so hard to just pay for a purchase and go our merry way without being harangued for personal information that would be more in line with a mortgage application?
Buying a speaker cable at RadioShack -- the longtime trendsetter in customer annoyance -- we had to repeatedly decline an extended warranty, credit card offer and request for home address. At a Borders bookstore, up until hours of that location being shuttered as part of the chain's bankruptcy measures, we were still asked to do ourselves a favor and pay $20 for a preferred customer discount card.
Think of the gantlet one has to run at Best Buy. First a worker tries to upsell you. Then useless Geek Squad add-ons are dangled -- even if one has been computer literate since the fresh-faced teen in a blue vest was no more than a come-hither glint in his daddy's eye.
Then -- after beating back offers for "optimization" and refusing to believe there is nothing in stock that hasn't been left unmolested in its box, unsullied by Geek hands -- you get the extended warranty pitch. Translation: "We sell crap and it is gonna break." Post continues after video.
Off to the cash register, where there are yet more offers to extend the warranty. Then there is a request to sign up for a preferred customer card. There is also the opportunity to add 18% interest to our purchase by applying on the spot for a credit card. Finally, there comes the "good news" that we can "qualify" for a trial subscription to a variety of magazines.
By the time you make it back to the car, you'll need a bottle of Gatorade and a B-12 shot. When did being a paying customer become so taxing?
The answer is actually obvious. With consumer confidence still shaky, and post-recession spending habits still relatively frugal, stores need to do all they can to maximize their return on every sale and entice you back for more. All the data they collect helps them track your purchases and target future offers. The data could potentially be sold to earn a bit more, and the revenue from credit cards, warranties and magazine partnerships help hedge against revenue drops.
In a recent interview, Michael Norris, a senior analyst for publishing industry-focused Simba Information, explained that it is a smart move for bookstores such as Borders and Barnes & Noble to promote membership fee-based rewards cards. Those who pay tend to become more frequent, loyal customers, he said. To get their full money's worth, they shop and spend more.
The Best Buy annual report released in April offered insight into its often annoying practices.
"The 1.1% comparable store sales decline in the services revenue category was due primarily to a decline in home theater installation, partially offset by modest increases in our sales of extended warranties," it reads. Commissions from the sale of extended warranties represented 2% of revenue in fiscal years 2011, 2010 and 2009.
Too much information
Various states have laws on the books limiting what information stores can request from their shoppers. California, for example, enacted laws back in the 1970s prohibiting the demand of "personal identification information" upon making a credit card transaction. The intent, back in the days of carbon copy swipes, was to keep this information from falling into the hands of fraudsters if it was written on transaction slips. In 1991, the law was amended to ban even a nonbinding "request" for this information. In an age of database compilation, the law has been invoked in numerous class-action suits and taken on a role in privacy protection battles.
"There are a few other states, such as New York, that have similar statutes, but they are not as strict because they allow this with consent from the individual consumer, which I think is more reasonable," says Determann, who specializes in data privacy.
In February, the California Supreme Court agreed that the retail chain Williams-Sonoma broke state law by asking customers for their ZIP codes. In response to the ruling, more than 150 lawsuits have been filed against numerous retailers, including Wal-Mart and Target.
In Massachusetts, a class-action lawsuit has also been filed against the craft store chain Michaels Stores for collecting ZIP codes during credit card transactions and using the data for marketing purposes.
Some are clueless
Determann says many retailers "don't know what they are doing" when it comes to data collection.
"That's still the case, even though there is so much litigation over this now," he says. "I still get pretty reputable, large retailers who ask me about this."
He recalls how recently, during a presentation, he asked a client about their practices. "Oh, we don't collect this at all," was the answer.
"Then, after the meeting, I went to their flagship store, bought some stuff and they asked for my email address. I asked the cashier whether she did this just for me and she said it's common practice. I immediately emailed the legal department and said, 'Guys, you need to put a stop to this, otherwise you may get sued over it.' It is very prevalent, and it's very hard for the companies to get a handle on it."
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It is annoying and I don't want data collected on my shopping habits, nor do I want to be targeted for special offers. The final straw came some months ago when on vacation I was asked to show ID when paying cash!
I don't argue with the salespeople or cashiers anymore. I simply make up information. I've given incorrect zip codes, phone numbers, addresses, and social security numbers. So far no problems.
WOW! Left out is the BIGGEST offender in "retail scams", and that is the one SEARS runs!
Ever "try" to buy an appliance there? (which I do not do anymore of course), every three words out of the "clerks" (they ar not sales people by the way) mouth is?
"WOULD YOU LIKE TO BUY OUR EXTENDED WARRANTY"?
I mean SEARS only tries to sell their warranties! Ask a question about, say a motor, all the response is "well, buy our warranty"!
Ask about the manufacturers warranty, they again say, "well, buy our extended warranty and you will not have to worry about the motor" (or whatever)!
Stay far away from SEARS! And in most other stores, if your so inclined, their extended warranites are half the price of a Sears one! Last item I bought at Sears was a large TV. bought the extended warrany direct from the manufacturer, a longer warranty, full coverage, HALF THE COST!
Retail consumer electronics brick and mortar shopping is headed the way of the dinosaur; I don't know why people come back to retailers that consistently badger customers. In fact, all trends point to online shopping as the refuse to avoid all the hassle. Is there really any major electronics item (maybe cell phones with promos) that "must" be purchased at Best Buy, Sears, HH Gregg, PC Richard, Fry's and the like? If you didn't know, Conn's in Texas got nailed big time in 2009 by the AG for deceptive extended warranty selling practices. Check out all the complaint sites/blogs - Best Buy gets hammered for the nonsense it spews. With expert and peer reviews, great pricing, no tax and hassle free, online is the only way to go for me.
Every single survey tells retailers that customers don't enjoy being hassled by pushy salespeople. Why would anyone make a spot decision on an extended warranty/protection/service plan (all semantics) anyhow? the "sales" person's word is HEARSAY and there is invariably a minimum of one half-truth or deception told about the plans. Year 2 for a product life cycle has no relevance other then to actuaries. Years 1-3 on a TV is still EARLY in its full life cycle (probability of one failure is less than 5%). Your appliances will still last, on the average, more than 10 years - so why do you care about guaranteeing the first 5? Even if you had one service call in the first 5 years, it still wouldn't pay.
Imagine brick and mortar retail competing on customer experience alone, without all the nonsense. There are still too many of us, 2 or 3 out of 10, that give in and say "yes" to the needless services - this only reinforces what they, the retailers, are offering and getting away with.
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