A different way to boost spending
The holiday season, from Christmas through January, is the biggest shopping season in America.
While it is rare to experience traffic jams in suburban areas in the United States, the holidays are an exception. Shopping malls are packed with people, and you could easily wait for a parking spot for hours. Here, many shoppers come to stores to return or exchange presents they received for Christmas or the New Year.
It is very easy and convenient to return an item in the United States. As long as you have a receipt, you can return or exchange clothing, shoes, appliances - almost anything. You can even bring back clothing after wearing it a few times and say that you changed your mind. Returning merchandise has become easier in Korea, but it is still not comparable to that in America.
Store employees might find shoppers with returns or exchanges annoying. But does the return policy only benefit consumers? No. The lax return policies allow reluctant customers to buy without worry. It gives them the psychological comfort that even if they change their mind later or decide the purchase was unnecessary, they can always get their money back. So consumers make swift decisions while keeping the option of return or exchange in mind. They will buy while the supplies last. As a result, the return policy encourages consumption and benefits retailers. It is the paradox and economics of return and refund.
In fact, the expansion of online shopping is also supported by free returns. A return policy is the key competitive edge for online shopping businesses. Customers buying directly from foreign websites thoroughly check the return policy before purchasing.
And companies are cleverly using the return policy. Uber, one of the hottest businesses in 2014, is one of them. Uber allows you to conveniently and promptly reserve a car via a mobile device, and it also offers convenient cancellation. When you call an Uber taxi, if it does not arrive within the designated time period, you don’t pay a fee for canceling. You don’t have to wait around, just take a yellow cab and cancel Uber. But this convenient option will bring the customer back to Uber again.
Cancellation and return policies may be a way to boost consumer spending this year. When consumer sentiment is revived, the Korean economy can overcome the risk of deflation. But we need to keep one thing in mind. Expanding consumption without increasing income is dangerous. This economic lesson was learned during the credit crisis in the early 2000’s. Credit cards were issued without a proper review of income, and after a brief boost in spending, it created an economic ordeal. The U.S. economy is among the only in the world that’s growing. There are more jobs and higher wages. It all boils down to employment. This year, let’s wish for increased spending, as a result of more jobs and income, without adding on to household debt.
The author is a New York correspondent of the JoongAng Ilbo. JoongAng Ilbo, Jan. 3, Page 26
by LEE SANG-RYEOL