Retailer’s rights to return defective products (shrinkage)

A small independent retailer wrote elsewhere recently [edited]:

I sold a pair of men’s drawstring hemp pants made by [redacted] from my web site. I explained that in the event he wanted to return the order, the pants couldn’t be exposed to fragrances or laundered before returning. Well, the first thing he did was wash them. Twice. He says they shrank too much. I and my family have worn many things from [redacted] clothing line so I have a feeling that they were too small to begin with. Now he claims that stores always allow returns of clothing that have been washed. I have never heard of a store allowing that. Has anyone ever heard of, or do any of you take returns of items that have been laundered, barring those cases when something came apart because it was defective?

As further details were provided, it appears the customer actually did buy a size too small but the incident is an important example due to the comments from the other independent small retailers who responded. All but one said that “no stores” permit the return of laundered products for shrinkage. This is false. These store owners are small, they aren’t aware of the practices of larger established retailers so this opinion is a reflection of their policies. They do not know that inordinate shrinkage is a product defect of sufficient merit to justify returning the product because they assume laundered returns amount to their loss rather than charging it back to you. Just because you’ve sold to stores who haven’t attempted to return products for inordinate shrinkage doesn’t mean they can’t or won’t start. This is what I told them:

As retailers, you have a reputation to uphold. If you don’t have the mechanisms by which you accept returns for defective products, consumers won’t do business with you for long. If you can’t get refunds from your manufacturers, you won’t stay in business either so you have to exert your rights. The consumer doesn’t see the manufacturer so easily, they see you. You are the representative of smaller, unknown brands, you are lending them influence. Therefore, you need to be certain they don’t damage your reputation.

The problem with manufacturing and retailing apparel and sewn products is that there are very few books or classes for entrepreneurs on tacit standards and practices. Most people prefer to wing it by hook and crook as they go along. You learn by doing it so as you learn, your policies evolve. Maybe you are limited by the relationships you’ve established with your existing suppliers but I strongly recommend that as you pick up new product lines, you legally contract to standards you may not have known you could enforce before. If they won’t agree, don’t buy from them. You have more power than you realize. Manufacturers are limited because established stores who know their rights aren’t going to buy from them either. If the manufacturer doesn’t evolve to be more professional (meaning better, not bigger), they’re not going to be around very long anyway. The point is, you have rights. You need to make policies to establish your right to return defective products to manufacturers.

More of you manufacturers now realize that retailers act as gatekeepers to keep defective products out of the marketplace. In some cases it’s a matter of liability. Retailers are in the position of enforcement (like it or not and they don’t) because manufacturers can be clueless. There are few barriers to entry; manufacturing isn’t like law or medicine. There’s no exam to determine competencies to bar entry into the market. Retailers needed to evolve to become gate keepers to control their liability and costs. Contrary to popular opinion, it’s not competitors larger than you who have “conspired” to keep you out of the market but your customers, the stores who pay you.

Just as manufacturers have the right to return fabric that shrinks more than was quoted -prior to production, you must test the fabrics (see pg 158 in the Entrepreneur’s Guide) consumers are entitled to the same courtesy; that’s why they choose to frequent given stores and why you want to sell to those stores. This is why many retailers (Penney’s, Sears, Nordstom’s etc) permit returns of products from consumers that have shrunk too much. Still other stores like LLBean and Zappos, permit returns for no reason at all. As such, few consumers hesitate to buy from them. The reason those stores can extend such liberal returns policies to consumers is because their fulfillment policies are very strict. With high vendor standards, they have less product that needs to be returned to the manufacturer.

It is an established practice that fabric must be tested for shrinkage before production. It is very common that shrinkages vary to the extent that different patterns (to allow for shrinkage) must be made for various fabrics even if it’s from the same vendor with the same fabric style number. It is more expensive to make separate patterns for shrink percentages but this is part and parcel of the cost of doing business.

Companies like Nordstrom’s and Penney’s set the shrinkage level to 3% so owing to their leadership and pull in retail, this has become a tacit standard even among retailers who don’t specifically include a shrinkage percentage in their fulfillment agreements. Barring the 3%, it is generally accepted by all comers that 5% is defective. In other words, if your products shrink 3-5% or more, you should expect to get chargebacks, returns and your reputation will be tarnished. Returns have many consequences you likely haven’t thought about. For example, it is standard that your sales reps are docked for commissions owed on the amount of returned product. However, if you attempt to reduce commissions for returns owing to defective product like shrinkage, you’ll need to find some more reps and depending on the amounts owed, could face legal problems. In the interests of fairness, the reason sales reps are docked for returns is because you hire them for their connections, their relationships with other reps (who gossip about stores) and experience. While you can’t hold them 100% responsible, in placing orders from retailers, they are implying a store is credit worthy. If there were no accountability, they’d sell to whomever to collect their percentage.

In summary, I recommend that retailers establish and enforce product quality standards. This is usually done via fulfillment policies because a buyer can’t legally stipulate the conditions of sale although they can negotiate it. I don’t doubt that a small or newish manufacturer will resent this or say “nobody else” is doing it but perspective is everything. If a DE is selling to small retailers who don’t know much, it may not come up at the outset but it will become more prevalent as they grow and start selling to more established stores who will enforce this and other rules of fulfillment.

By the way, do you remember Beth, the DE I wrote about before? She went broke after she got her first big account. Yep, the store returned $10,000 worth of products that shrank too much. The store got too many returns on one item that they pulled her entire line and shipped it back. I tried to tell her. I begged her. I even offered a 50% discount to make a new pattern for the shrinkage of the one affected style. She declined and halfway implied I was trying to create revenue for myself because none of her other doors (all small of course) had ever returned anything. In situations like this, one doesn’t feel vindicated, there is no “I told you so”. Maybe Beth deserved what she got but the collateral damage was lethal. The eight stitchers living on the Indian reservation with 80% unemployment doing her sewing, didn’t deserve it.

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  1. Elaine Good says:

    Whew, boy. I know I would have been really peeved if the retailer who sold my sister a $400. silk/linen/cotton suit back in the mid-80s hadn’t taken back the outfit; she got caught in a rainstorm in DC and although she had an umbrella, the lower back of the skirt got damp and shrank about 8 inches in length…

  2. Marie-Christine says:

    Oh, are you kidding? If something shrinks so much that I can’t wear it any more, or shreds or whatever, even if I have only washed it 5 times :-), you bet I return it! And I’d never buy again from a store who turned me down, and tell everyone about it. Do you really think your retail customers buy clothes in order to wear them once or twice?!? Listen to Kathleen!

  3. Christine Joly says:

    This brings me to the question of prewashing and shrinking offered (for a fee) by the textile manufacturers. A mill has stated that their shrink tests on a bamboo/cotton/lycra is 9% and my shrink test come in at 10.75%. This test was done on chemically softened fabric. This is a lot of shrinkage to build into a pattern. They mention that they can pre-wash and restore the fabric as part of their service, thereby reducing shrinkage. I am skeptical. Any thoughts?

  4. Dawn B says:

    As a manufacturer and (online) retailer, any return for “cause” (product defect under my guarantee) is in a way a bonus to me. It gives me the opportunity to engineer the problem out of the product. I would much rather have a customer return something that didn’t perform than not contact me and tell everyone they know that my products are crummy. It’s a chance to earn kudos for great customer service AND a chance to make sure that particular situation never comes up again.

  5. Renee says:

    I agree with Dawn. I would much rather take back product that is not serving the intended purpose. Why would I want to give up the opportunity for great word of mouth about my customer service?

    On shrinkage, I worked hard on my own product’s pattern to minimize the impact of the 5+ percent shrinkage that is an inherent part of one of my materials, and I test each new batch of fabric in the door for shrinkage, then modify two pattern pieces to account for the new shrinkage.

    Good thing, too. The last 50 yds I received had 9% shrinkage.

  6. Dana says:

    One additional point on shrinkage standards of large retailers. There is generally a separate shrinkage standard for knit and woven goods. 3% would be appropriate for wovens. Knit standards are usually more generous.

  7. Ken Simmons says:

    I was once a manufacturer and retailer of the clothing I designed. I read at that time somewhere that it was wiser to make existing customers happy (I substituted”Thrilled”) than to spend money and effort trying to attract new customers. In other words, to do advertising that cost 400.00 to try to attract new customers and at the same time refusing to give a customer his/her money back on a 100.00 purchase was a mistake. The old customer was a real customer i.e. in the store, to whom you could communicate face to face and on whom you could practice your salesmanship. The new customer was a figment of hope and imagination. To spend the 100.00 to thrill the existing customer and therefor have him/her probably buy something else immediately, especially after you have called something to their attention and showed them the unique aspects of the item and how and when it could be worn, was a better use of your money than a scattershot attempt to attract a new customer. In other words, have a generous return policy and it will pay for itself.

  8. Rocio says:

    I think it’s important to point out the different situations that call for a shrinkage allowance:

    A) Shrinkage due to Garment / Piece Dye or wash (applies to both knits and wovens)
    The tests provided by the mill become irrelevant, because chances are they didn’t test it with the exact same type of wash, machine, etc

    B) Shrinkage due to Heat Transfers or Silk Screening (mainly knits)
    This can be accounted for in the pattern after making one sample

    C) Shrinkage due to spreading fabrics without relaxing (knits)
    The fabrics need to be allowed to “recover” off the rolls before spreading and cutting… otherwise they will recover on the hanger

    D) Shrinkage due to steaming or pressing before shipping (knits)
    This is usually caught at the sampling stage if the same fabric source is being used for production

    E) Shrinkage due to average wash / tumble drying by consumer
    We’ve found that in most cases this is consistent with the results provided by the mills in their test results

  9. CDBehrle says:

    It always surprises me when companies do not allow for shrinkage, or similarly for differences between fabrications that may be used in the same style. Recently I noticed a new designer’s exciting and brilliant looking work (I loved it for the very interesting cuts & complexity of the pattern making) super-super marked down. One trip to the dressing room with a big bunch of garments made it very clear. Not one piece fit properly in more than one fabrication, between the three to four styles in 3 different fabrications (each) maybe 2 or 3 pieces fit. It seemed obvious s to me the designer simply took patterns created for say, a slinky, slightly stretchy fabric and cut the same pieces into say a drapey-no-stretch-whatsoever fabric (and visa-versa) and expected it to work! It made me so sad to see such technically beautiful work on the original patternmakers part, destroyed. When a garment was in it’s originally intended fabric -you could tell immediatley- it was a dream. I cannot imagine this small designer survived the return rate they must have gotten.

    I’ve hardly ever have to deal with this issue (thankfully) working in leather, but recently I have had to make a secondary pattern for my stretch leggings, to retain the fit between 2 different stretch leather sources. Big changes.

  10. Anne says:

    I order all my knits preshrunk from the mill. It is worth the extra cost to me, knowing that the shrinkage will be 1% or less (which tested true in my wash tests), and that I don’t have to worry about different colors shrinking differently. In infantwear, a little bit of shrinkage can make a big difference in fit!

  11. Well of course a customer should be able to return a garment if it shrinks, or if a garment that says it can be washed in water then bleeds and get stained. BUt just out of curiosity- don’t large retailers wash all fabrics before tailoring to ensure that shrinkage won’t be a problem?
    I once had an experience where a customer had washed a garment and then found that it had been stretched at the seams and the darts. The garment had a clear washing instruction “gentle handwash only”, and I suspect she either put it into the machine or she bought a size or two too small and the stress at the seam was too much for the thin fabric. I normally hate to do such exchanges/refunds, especially when I knew we had sold 20 other tops in the same style and fabric and no one else had complained, but I finally did give her a refund because I wanted her to stop yelling at me and I hoped she would come back again (she didn’t :(!! ).

  12. stuart_ah says:

    Bed Bath & Beyond sells products that are below standard. The latest faulty purchase – in a long list of faulty purchases – has caused hundreds of $ in medical bills, and there will be more bills in the upcoming weeks and months. BB&B loves to sell products that are below standard and has no problem saying they will not accept liability for any of their products. They sell cheap products – cheap because of design flaws, cheap because of corner cutting in production. My latest faulty purchase … a shopping cart – by Faucet Queen (all black with plastic back wheels). The front wheels ‘trip’ on the slightest uneven patch in a pavement. I managed to catch the cart from pitching forward several times. Several times, except one. And I went flying forward. I contacted the company immediately. They seemed professional and sincere, at first. But what a croc. As the ‘claims’ process went along professionalism and sincerity turned into rudeness and an ‘up yours’ attitude.

  13. Kathleen says:

    The latest faulty purchase – in a long list of faulty purchases –

    I understand your frustration. What I don’t understand is why you continue to shop there if you’ve had such negative experiences. Each dollar is a vote. Don’t vote for them.

  14. stuart_ah says:

    The latest faulty purchase – in a long list of faulty purchases –

    Well, I guess you are right. I suppose I don’t know either. Previous product faultiness (is that a word?) didn’t end up in painful injury, so I would buy small things like can openers and the like. But you are right. I should have known better and not shopped there at all, no matter how small the purchase.

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