Junger and a colleague invented the SIRAS program when they were both employed by Nintendo in the mid ’90s. As Nintendo moved from the original system to the Super NES, Nintendo64 and beyond, it recognized that customers were “returning” their older systems for full price in order to upgrade to the newer version. Retailers either didn’t know the hardware was beyond the return period or were trying to appease their customers. Either way, they were charging the systems back to Nintendo. In 1996, Nintendo debuted its new POS system with Wal-Mart. It was such a success that Nintendo spun out a new company to sell it to other manufacturers.
One of those manufacturers is competitor and PlayStation maker Sony Computer Entertainment. “Before SIRAS, any time a customer came up to the return staff, they would just take it and send it to us and we would take the hit, even if it wasn’t a fair return,” said Bob Wood, senior manager of sales planning and analysis for Sony Computer Entertainment. “Using the SIRAS technology, we and our retail customers have saved millions of dollars.”
Philips has seen similarly good results. That 10 percent return rate is now less than four percent, and three percent in some product categories. “Do the math,” Sciarrotta said. “You go from 10 percent to four, that’s significant for a company like us.” In another example of the savings Philips sees, Wal-Mart reported to the company that LCD televisions in the 15- to 20-inch range yield an average return rate of 20 percent and above. For Philips, that rate is in the single digits.