More Stores Moving to Digital Receipts

With the holidays approaching, more retailers are rolling out digital receipts in an attempt to streamline the inevitable glut of post-holiday returns. But not everyone is happy about it.

If you've visited Gap, Kmart, Best Buy, Sears, Apple or a growing number of other stores lately, you might have been offered an emailed receipt at the register instead of just the traditional paper version. That's a welcome change for some who have questioned why it has taken so long to phase out the antiquated paper records. Others, however, remain critical of the change, fearful of what retailers will do with a growing body of personal spending data.

Retailers embrace digital receipts

From a retailer's perspective, digital receipts offer several benefits. For one, they provide added convenience for customers, who require receipts for such things as product warranties and tax records, in addition to store returns.

"We view it as a smart service for our members," said Tom Aiello, division vice president at Sears Holdings Management Corp., which started its e-receipt program last year for both Kmart and Sears under the Shop Your Way Rewards program. Members, who Aiello says number in the "tens of millions," automatically receive their receipts via email and can also access receipts on the Web or on their mobile phones. "Even if you happen to lose the email, you always have access to your digital receipt," he said.

Electronic receipts are also largely considered as an aid in helping cut down on fraudulent returns, which the National Retail Federation estimates will cost stores up to $3.48 billion during the 2011 holiday season and $14.37 billion for the year as a whole.

Digital receipts "force the integrity of the transaction," said David Crossett, founder of Ready Receipts, a digital receipt technology provider. "Many times, return policies will make dishonest people of honest people."

For example, when a customer loses a receipt, he or she may attempt to return an item to a store with more flexible return policies than one that requires a physical receipt.

With a digital receipt, however, the transaction records are not only more accessible to customers, they can be easily looked up at the register by a sales associate. That means less hassle on both sides of a return.

"It definitely will help cut down on fraud," said Joe Masar, marketing director for D&B Supply, an Idaho-based, farm-and-ranch store that is currently exploring digital receipt solutions. "You never want to treat your customer like a criminal, so we tend to trust them. Sometimes we're over-trusting." However, with a digital receipt, Masar said, "then there's no question."

Consumers see positives, negatives to emailed receipts

Consumer reaction to digital receipts varies.

Fans of e-receipts say this development is a long time coming for shoppers who are accustomed to accessing financial records online and view the antiquated paper receipt as a barrier to the returns process.

"I personally like to get the receipt that way," said Chris Tointon of Midland, Mich. "It allows me to keep track of receipts digitally and not have to file them in a drawer and lose them over time."

Katie Abbondanza of Baltimore received an email receipt following a purchase from an Apple store and said she loved it. "It was stored in Gmail -- I didn't have to keep track of the very important paperwork," she said.

Other customers are wary of the expanding body of personal data available to retailers. Greater knowledge about a customer's spending habits allows stores to advertise products to them more personally. Still, some people consider this level of marketing to be invasive.

Kamen Gordon of Richmond, Va., opted for a digital receipt at Banana Republic recently, which he said came in handy when he had to return an item to the store. "But within a day or two, I was beginning to get their promotional emails," Gordon said. "My main [concern] is how the information is used."

Masar of D&B Supply said the challenge is working with the consumer to alleviate their privacy concerns while opening new channels for marketing to customers.

"I think that's the big hurdle. For most consumers, there's that scariness of who has that data and do you trust them," he said.

Kmart spokesman Aiello acknowledges that the corporation is using this information for more personalized marketing such as offering coupons and promotions based on spending habits, but he views it as beneficial for consumers.

"This really starts to open up opportunities that a paper receipt just can't," he said. "If the customer has shown interest in certain things, [he or she will receive] recommendations as part of the digital receipt."

Meanwhile, with the holiday season just around the corner, some consumers have uncovered some other downfalls of store programs that automatically issue emailed store receipts.

Tammy Avery-Kentros of Detroit recently shopped at Kmart and came home to a surprise.

"My husband opened the email before I got home and told me everything I bought," she said. "I guess I can't shop for him there if I want it to be a surprise."