WINN-DIXIE TO ACCEPT RETURN CENTERS

MATTHEW W. EVANS

JACKSONVILLE, Fla. -- Winn-Dixie Stores here has agreed to host exclusive merchandise return centers for customers who purchased items from a variety of other retail distribution channels, including other brick-and-mortar stores as well as the Internet.

Winn-Dixie employees will be trained by The Return Store, a Fair Lawn, N.J.-based company, on the use of its software system, which handles return transactions. Slated for October, the system will undergo "beta" (field) testing in the Miami and New Orleans Winn-Dixie markets. Return centers will be set up at Winn-Dixie customer service areas. Although a separate computer terminal can be supplied by The Return Store, Winn-Dixie's existing computer system will host the software at the retailer's request, according to the supplier.

"We don't want our customers to have to go somewhere else to get something that we can offer," said Mickey Clerc, vice president, public relations at Winn-Dixie. "Hopefully we can pick up a few new customers with it."

That intangible is a primary benefit of offering the service, according to Return Store president N. S. (Buddy) Hayden. "If Winn-Dixie has a 30% market share in a market, out of every 10 customers we bring in, some of them have never shopped in a Winn-Dixie store before. So the advantage for Winn-Dixie is that we drive customers to the store. We are the destination site."

Winn-Dixie, as well as any future grocery chains, will host Return Store centers on a "zip code exclusive basis," said Hayden. Return Stores are slated to open solely within the grocery channel nationwide. By the end of next year, Hayden expects 400 to 600 of 1,100 Winn-Dixie units in 14 states to be hosting the centers.

"Because they compete with too many merchants that are on the Web or in catalogs," mass merchandisers will most likely not host Return Stores, according to Hayden. Items bought on-line, on television, through mail-order catalogs, and in traditional brick-and-mortar retail locations can be returned to the centers.

For Winn-Dixie, this new service will enhance the one-stop shopping experience, said Clerc. "We are trying to make our store attractive to customers by offering lots of services that provide as close to one-stop shopping as we can."

Richard P. McCook, Winn-Dixie senior vice president, noted in a press statement that adding the return centers "was consistent with the company's continued efforts to provide the most modern and important products and services to its customers."

For hosting the return centers, Winn-Dixie will be paid a fee based upon the number of stores with a return center. The retailer will also receive a percentage of the transaction fee charged to the merchants for return items.

The Return Store also makes some money on the transaction fee paid by the merchant. The majority of revenue going to the Return Store, however, comes from freight consolidation. "Someone has to pay for shipping and handling," said Hayden. "We get that and then we take the freight and consolidate it and ship it back for less."

This business model is unlike anything else, according to Hayden, who said that the average percentage of total purchases returned is about 9% or 10%. On the high end of returns, he said, is apparel (with a 20% to 25% return rate), and on the low end are compact discs and books (in the 3% to 5% range).

"I don't want to give the impression that there's no competition," he said. "But we're the only place that exists where a customer can physically go and give merchandise back to a human being and get a credit right away and have a pleasant experience with a friendly person. And it takes you about three minutes to do this whole transaction and walk away with a receipt.

"UPS, Federal Express and the U.S. Postal Service -- everyone has a way for you to send stuff back but we're the only ones in this [grocery] space with the human experience."

Beta testing will also take place with other supermarkets in six markets around the country. Hayden would not name any of the other food retailers before deals are confirmed.

He said the number of Return Stores in Winn-Dixie and at other grocery chains would expand considerably after the busy holiday retail season. "Hooking up stores is really simple and if we're using their system it's even easier -- just a matter of training."

Data collected from merchants determines where a Return Store will be placed. A supermarket covering a zip code where a majority of a merchant's sales take place is likely to be targeted as a host.