Grocery returns lead to greater customer engagement and increase in sales, research finds

LAWRENCE — Most grocery stores have a policy allowing purchasers to return items that are spoiled, damaged or unsatisfactory. While this process proves valuable to the customers, new research shows it can also be highly beneficial to the store.

“A return reminds people about a feature that the retailer offers, and so they’re drawn back to the retailer,” said Kissan Joseph, Crown/Sherr Professor at the University of Kansas School of Business.

His article titled “Beyond the Receipt: Risk Reduction and Locus of Attribution in Grocery Returns” examines consumer behavior following such product returns. The research demonstrates that making a return heightens the salience of a retailer’s return policy, boosting the overall attractiveness of their offerings. The article appears in the Journal of Retailing.

Co-written with Lauren Min, a KU associate professor of business, and Boram Lim of Hanyang University in South Korea, the research finds that following a return, customer engagement rises significantly, driving a 40.1% increase in subsequent sales.

“That’s a huge amount,” Joseph said. “But for certain segments, it’s even higher. So for variety seekers, and especially the top quartile of variety seekers, the postreturn bump is in excess of 100%. So they’re really going for it.”

A similar effect holds for low-spenders. The bottom quartile of spenders also exhibits a postreturn bump in excess of 100%. 

“They’re saying, ‘I have this safety net. I can expand my basket size without risk,’” Joseph said.

Total returns for the retail industry reached $849 billion in 2025. Yet this aspect of retailing is often overlooked by the general public, he said.

“When going to the retailer, you forget the fact we can do returns. It’s not even something that’s in your head. You see the customer service desk, but you’ve never gone toward that route. And then you have a return experience, and now you say, ‘That was very easy.’ All of a sudden you are much more likely to take advantage of this safety net,” Joseph said.

Conversely, the research shows that as time goes by, customers forget about this aspect and revert back to their original behavior.

“This is specific to grocery products. By the time you get to the third return, the bump is negative. If you are having multiple returns at a retailer and these are frequently purchased items, you’re probably really unhappy with this retailer. There’s something fundamentally wrong, which is why you’re returning so often,” Joseph said.

In contrast, research in online fashion has found the opposite effect: Shoppers can return more and still exhibit a postreturn bump.

“With fashion, there is always a taste issue or size issue involved,” he said.  

A KU professor for 33 years, Joseph originally focused his research on compensation design. But he’s since expanded to pricing, issues at the marketing-finance interface, and, now retailing,

“When you’ve worked in a field for 33 years, you sort of develop multiple interests,” said Joseph, who was recently added to the editorial board of the Journal of Retailing.

For grocery chains wanting to take advantage of his new research, Joseph notes one implication is that firms can reduce their promotional spending (such as a special offer or a coupon) on those who have returned something recently. These customers are going to exhibit a postreturn bump anyway, so retailers can “free ride” on this lift, thereby saving marketing costs, he said.

Also, this information becomes significant for retailers contemplating putting limits on such policies.

“If the grocery store is contemplating restricting its return policy, there are some segments that should be off limits, like variety seekers and low-spenders,” Joseph said. “They truly are increasing their purchases by 100%. So you don’t want to say, ‘Hey, you can’t do returns anymore.’”