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How Sears Makes Money

By Kim S. Nash  |  Posted 2003-01-17 Print this article Print

Technology helped the $41 billion a year retailer improve the way it processes 23 million items returned each year—and make money doing so.

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How Sears Makes Money On Returns For some retailers, returns are written off as a cost of doing business. But Sears has created a process that actually generates income and is able to press suppliers for proper credit due on returned products. Sears and logistics partner Genco have also built a carefully maintained database to help decide how to handle each return, in order to wring the most money from it.

1. Customer returns product to a Sears service desk. Service agent scans tags into point-of-sale system, gives customer refund.

2. Returns placed on a pallet in back room. When stack reaches about seven feet, store manager calls Genco for pick up.

3. Items brought to one of three return centers run by Genco for Sears are scanned and tagged. Genco electronically credits each store for the merchandise. Items are then sorted by manufacturer and type of item.

4. Depending on the contract with the supplier, Sears handles returns different ways.
  • REFUND: Supplier takes item back and issues Sears full or partial credit.
  • RESALE: Sears sells item to online auctions or to discounters. It may even store some items such as gardening gear for resale the following year.
  • DESTROY: Underwear or bathing suits often get heaved.
  • DONATE: Some items make their way to charity.

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    Senior Writer
    Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
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