FREAK-Shot: Christmas Ornament Edition

Reader Tim Kelly sends in photo from a store in Lombard, Illinois:

As Tim writes:

I spotted an interesting sign while out Christmas shopping the other day.  The sign stated the company’s “breakage policy,” where any broken item must be bought, but that the store will only charge half price on the broken item.  The sign continued offered to repair the broken item, free of charge (I confirmed the free repairs from the shop owner, as it is not explicitly stated in the sign).

The sign was located on a mall kiosk selling Christmas ornaments.  I imagine breakage is a big issue for such a shop, as their product is relatively fragile and are highly enticing to bored kids stuck Christmas shopping with their parents.

My initial instinct upon seeing the sign was that this policy seemed to be inviting people to game the system.  A person could easily damage an ornament slightly in such a way that wouldn’t be highly visible on the tree, “apologize” emphatically to the shop owner, and walk away with a half priced item. This method is especially enticing given the free repairs offered.Ultimately, I imagine the good will garnered from the reasonable breakage policy leads to a lot less “break and run” situations where the store recovers nothing for the broken item, and the store ultimately is better off.  This would be especially true if the store still turns a profit on the half-priced items, which is likely.  I’m interested to hear what you and the Freakonomics community have to say on the topic.

What do you think, readers?


April

Accidental breakage is a cost of doing business. Additionally, when you set up a kiosk in the walkway of the mall, there's going to be accidental breakage if the business manager doesn't arrange stock appropriately. Breakage policies aren't worth the paper, ink, and laminate used to produce them.

Businesses should deal with the people who purposefully break their products (or allow unsupervised children to break products), and plan for accidental breakage in their business model.

With that said, if someone accidentally breaks something they should offer to pay for it.

RGJ

What the heck was so offensive about this that it was hidden?

Legally, no court in the US would ever make you pay retail for accidental breakage of an item that isn't safely inside a retail establishment, and instead set up in a high traffic area. If your shopping cart is jostled into a glass ornament perched precariously on a waist-high shelf, the burden of that "negligence" is the sellers, seems to me.

The half price sign probably is a great deal for the seller, particularly when you factor in that many or most passersby aren't just going to pony up full price anyway. Almost makes them seem customer friendly.

Legal discussion on "you break it, you bought it" here :http://legallad.quickanddirtytips.com/you-break-it-you-buy-it-law.aspx

Howard Tayler

As Leavitt points out in the podcasts, people commit a lot less crime than you'd expect if opportunity and incentive were the only motivators. This policy assumes that most people are good, honest creatures. Besides, it's quite difficult to break something "just a little bit."

Bill Pitcher

I suspect list price is twice what it would otherwise be....

Kazzy

I would assume that the shopkeeper has final say on whether to enforce the breakage policy. If broken in such a way as to still make the item desirable, he might simply accept the apology and say, "We can probably repair that ourselves and still sell it at full price or at least at 75%." My hunch would be that 50% would be the MINIMUM price charged; I doubt he is bound in any way by the presence of the sign.

cathy

Seems like a very generous policy to me. I would expect a "you break it, you bought it" policy at a Christmas ornament place. I suspect that people are more likely to not report broken ornaments (even with the policy) than try to game the policy. At least with the only-pay-half policy, the owner might recoup some of the cost of the broken ornaments.

Bill O'Brien

I think it's very generous. Reminds me a bit of the rain check policy at a golf course or car wash. Inherit risk for the patron (playing loudy weather) but gratitude for chancing it on a day many others wouldn't.

Irene

More interesting to me is the last clause, re children: "as you aren't liable for their actions". So this means if my child runs haywire through the kiosk and breaks half the stock, I am not liable? Good luck holding him responsible: even at 50% my three -year-old can't pay, I'd think the shop owners WOULD hold the patents liable!

RGJ

It says "so" you are not liable. Poorly phrased, but the point being if they don't touch something, they can't break it.

Emily

"You break it, you bought it" policies are actually unenforceable. The shop can only claim it's actual loss - what it cost the shop, plus any expenses. This is quite a smart way of getting what it is entitled to while seeming to be generous.

sam

The purpose of the policy is to make parents (and their kids) be more careful when handling the ornaments, think twice before touching them. Also, if one wants a cheap broken ornament, he would probably buy it in a second hand store. One has to be super dumb to break something on purpose and get it half price, when a day after christmas this same thing will cost 75% less.

Des

Honestly, even though I know the policy is unenforceable, seeing a sign like this would immediately put me off from the establishment and make me leave without buying anything. The verbiage presupposes that I don't have enough integrity to pay for an item I broke, and it implies an adversarial relationship between me and management. It feels like being told with a fist pump "you kids get off my lawn" by some snippy old man, and takes me right out of the buying mood.

Maybe that's just me , though...

2109

It makes sense to think that this is a good deal for the store since they are getting at least half of the money for the broken item, I agree with that. But I feel like it's unlikely to think that a lot of people would go through the trouble of slightly breaking something - on purpose - in a way that the object's appearance is not going to be affected. Especially because this kind of store, for already having a high number of incidents like this, usually has someone watching closer to the customers. And even if someone really thinks the product is worth going through the trouble, I still think it would be a little portion of the people because doing a "hidden work" like this would feel, for most of the morally correct people like a thief work, which would probably (and hopefully) stop them from doing so.
Economically speaking, the risk of getting caught plus the moral implication of it, would make the probability of breaking the ornament on purpose go down or even disappear, while the percentage of loss of the store would be cut to the half, what makes this breakage policy better than the regular one.

Read more...

Randyycia G.

Wow, this is an interesting blog. If breakages occur a lot it is a nice idea to go ahead and sell the ornaments for half price, it's better than taking a complete lost. But you would also have to look at how much does it cost to repair each ornament for the customer. Is it really worth selling it for 50% off and giving a free repair? That repair cost time and money. I also think the policy is a good idea but I wouldn't have a sign posted up about it because that could be an incentive for people to "accidentally" break items. I think the policy should be in place but not posted on a flyer for everyone to see.

Gr4mb0

While it seems the shopper has an incentive (50% of original price) to slightly break an item on purpose and have it repaired, the time it takes to explain to the shop owner and to have it repaired as best as possible may be a cost that outweighs the shopper's benefits. Either way, the system certainly appears to be open to gaming if the shopper feels it worth the trouble. I do like how the last part of the sign throws in a bit of accountability for children that might simply make the shopper want to be more careful instead of figuring out a way to cheat.