No more freebies: Companies crack down on customer perks and rewards

Delta has taken steps to try to reduce crowding at its popular airport lounges. It has largely barred staff when they’re flying standby and raised membership fees and entry requirements. In February, American Express Centurion Lounges started charging members $50 to bring in an adult guest and $30 for children between the ages of 2 and 17 for American Express Platinum cardholders. Previously, members could bring two guests for free. The fees are waived if a cardholder spends $75,000 on the card in a year.

Those changes come as airlines see a new trend: Many travelers are willing to pay more to sit in business class or for other roomier seats to make flying more comfortable.

United, Delta and American executives said on earnings calls last month that premium-seat revenue has increased , outpacing growth from the main cabin. Airlines are racing to add roomier seats to cater to those free-spending travelers.

While the airline industry has turned profitable during the post-pandemic travel boom, retailers have faced a host of new challenges.

Inflation has squeezed consumer spending, said Marshal Cohen, chief retail advisor for Circana, the market researcher formerly known as IRI and The NPD Group. As shoppers buy fewer discretionary and big ticket items, companies have taken a harder look at expenses, he said. If they can’t boost sales, they can try to impress investors with better margins.

“We are now living in an environment where growth isn’t going to happen by selling more product so easily and when you sell more product, it’s easier to cover the cost of getting those sales,” he said. “Retailers and brands have had to step back and look at all of their components of their business and decide which ones are working, which ones are not.”

Even Amazon, the retail giant that pressured the rest of the industry to offer free shipping, has attached more strings. Starting this spring, customers must pay a $1 fee if they return a package at a UPS store, instead of at an Amazon-related store. The fee applies if the package’s delivery address is near a Whole Foods, Amazon Fresh or Kohl’s. Amazon owns Whole Foods and has a partnership with Kohl’s for receiving returns.

Yet all of those retailers allow shoppers to return items for free at a company store rather than in the mail — a move that not only can reduce shipping costs but increase the chance that a shopper may buy something else. The extra step may also make a customer think twice and decide to keep the item instead.

Some retailers have tightened return policies, too. In March, Macy’s shortened its return window from 90 days to 30 days. By making the change, the company said it can get products back on shelves more quickly when they’re still in season. The move also reduces the odds that merchandise winds up on the clearance rack.

Amit Sharma, CEO of returns technology company Narvar, said retailers have started to retrain customers on how to return items, much like grocery stores have gradually taught shoppers to employ reusable bags. He added that after the pandemic created supply chain headaches, shoppers have a clearer understanding that shipping and returns come at a price.

“To drive that online demand, free shipping and free returns were put in place, but now we all know it costs significant money,” he said.

In some cases, retailers are calling return fees “restocking fees” to refer to the extra labor involved in processing the item, said Heidi Isern, the head of Narvar’s design and research.

In other cases, retailers are offering customers more choice, she said. For example, Levi Strauss, Ann Taylor, Crocs and Brooks Brothers have a home pickup program in some cities, powered by Narvar, where customers can pay about $5 to $9 for a delivery person to retrieve a package.