It is in the interests of the retailer to provide good customer service when all goods are on sale or return. 
The major multiples also include warranty performance terms in supply contracts as this also reflects on their reputation and customer satisfaction.
I find both Aldi and Lidl excellent and the incumbent big 6 supermarkets have still much to learn from both of them in terms of shopping experience. They also operate on much lower profit margins. The last time I looked at the Aldi UK annual accounts they made 2% profit compared to around 10% for the incumbents. Aldi will consider the UK one of their higher profit countries where in some markets they only make 0.5% overall profit.
Only a small percentage of a retailers stock is ever on Sale or Return. It is mostly firm sale, but of course if goods are faulty then they can be returned for full credit. Even then though there are variations of that with some agreements with manufacturers allowing an extra percentage discount to allow for any faulty goods received back from consumers.
Major retailers will also only deal with the most reputable of manufacturers or suppliers that are offering quality goods where the chances of high product failure are very small. Of course even those manufacturers and suppliers can produce / handle faulty batches where failure rates are high, and then they will step in to assist the retailer, honouring their agreements with them, whilst protecting their good name, hence the product recall system. 
No retailer can survive on a 0.5% bottom line profit (I think that is what you are quoting Rod) without endangering their future existence. However, what is happening is Aldi is "buying sales" whilst investing in store and CDC development. That is a very expensive exercise and is using the profits of today to build their future, which has resulted in a 17% fall in profits in 2016. In the meantime they are reducing their margins to the bone, and therefore must be controlling their costs to a level to match. This is why Tesco and Sainsbury's have announced plans to greatly reduce their management and staff costs to help them fight Aldi, and Lidl, with lower prices. That is the only way they can go. But, the consumer should be aware of two major effects of this:
1. Staff will be in fewer numbers and will not be able to give the level of service you currently enjoy
2. Retail prices will eventually rise significantly once this retail price war is over as to stay in business the survivors MUST again return to acceptable levels for the shareholders and purely meet the costs that will be always there.
I have extensively dealt with many UK multiples with a previous business and that was almost ALL on a sale or return basis. Now this might be sector based but was certainly not the impression the buyers gave. The multiples I've sold goods through were only minor ones that you probably never have heard of like Tesco, Sainsbury's, WH Smiths, Menzies, Curries and Dixons plus quite a few others. I have also dealt with many European multiples with the large ones were all on a sale or return basis. In the UK and Europe, prominent positioning, in-store advertising, window displays, special brochures like for Christmas all cost extra. Positioning was normally on a basis of additional discounts where all others you paid advertising fees. Retail discounts tend to be sector based depending upon the profit margins available after manufacturing costs. The US which I have also dealt with is completely different where you buy shelf space using what they call MDF's (market development funds) with pricing according to position with 'end caps' which have the highest sales costing the most. However, the retail margins are much lower where the MDF's basically cover the retailers running costs and the small margins are their profits. Credit terms in UK and Europe were normally on a minimum of at least net monthly but net two or three monthly were not unusual. In the US credit terms of up to 180 days or more are normal. Credit terms for toys in the US are on a net annual basis with settlement once a year in July! A good sector to avoid unless you have very deep pockets!
If you knew anything about European supermarkets you WOULD know net profits are all typically in the region of 0.5% to 2% (This is NOT gross profits where all business typically run in the 30-40% region or more, those that don't generally go bust pretty quickly). Yes, on these margins costs have to be very tightly controlled, hence the extensive use of sale and return, so they are not left holding loss making stock. These low margins have lead to a few retailers going bust, but massive consolidation has meant only a few very large continental supermarkets now exist with turnovers in the €60-100bn region. Aldi and Lidl were both around €70bn when I last checked a year or so a go. Many of the European retailers are privately family owed including Aldi and Lidl, so they have not got hungry public investors to keep happy at the 8-10% profit range of the 6 UK incumbents.
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Topic: Lidl customer service (Read 9320 times)