by Stuart Fuller (CentralNic)
In a series of short articles explaining some of the growing trends in intellectual and physical asset risks, Stuart Fuller examines one of the most worrying trends impacting retailers across the globe, Wardrobing.
In their annual report published in last 2018, The National Retail Federation highlighted that merchandise returns approximately equated to $369bn, 10% of total sales. Another study, published by Appriss Retail, based on a detailed merchant survey, found that nearly 32% of retailers had experienced the practice of Wardrobing in the last year. Return fraud, which not only includes Wardrobing but also customers returning fake items, using a receipt for a genuine item or even counterfeiting the receipts themselves, hit three-quarters of retailers according to NRF.
Retail fraud was traditionally thought to just refer to in store theft but technology has led to a growing amount of additional issues that most retailers need to create risk mitigation strategies for. One such growing threat comes from Wardrobing, or the return of used, non-defective merchandise, which presents a unique challenge year after year for retailers, with over 70% experiencing the issue according to a survey carried out by the National Retail Federation. Wardrobing itself isn’t illegal, although it is highly unethical and against the conditions of sale of many retailers. With so much focus put on events such as Black Friday, Cyber Monday and of course the traditional Boxing Day sales by retailers, dealing with the aftermath is often a major problem for retailers, especially where they have to exercise extra caution to ensure that the products returned are genuine.
Perhaps one of the most notorious examples of wardrobing comes from the 2004 independent film My Date with Drew, which was filmed entirely on a video camera, purchased the camera from a store in the US, used for 30 days to shoot the film and then returned for a full refund.
“Retailers have the difficult task of providing superior customer service by always giving the benefit of the doubt to their shoppers when it comes to returns, while simultaneously working to make sure they protect their business assets,” NRF Vice President of Loss Prevention Bob Moraca commented. “We expect retailers to continue their tried and true ways of combating fraud through increased usage of identification verification, as well as seeking new and innovative approaches on the back end.”
Major retailers are starting to create strategies to minimize their exposure to the risk of such retail fraud. Bloomingdale’s has begun attaching 3 inch plastic tags to dresses costing more than $150 in their 40-odd stores in the United States and leaving them on after their sale. The special “b-tags,” as they are called, are attached to visible places like the front bottom hemline to make them difficult to hide when the item is worn. Once the black plastic tag is removed, the garment cannot be returned.
UK online retailer, ASOS has now announced they will create a black list of serial returners in the hope that other retailers will agree to share data, subject to GDPR regulations, on those shoppers who regularly return items after purchasing an item with the specific purpose to use it once. Interestingly there’s a growing trend for buyers to purchase (9% according to a UK-based report published by Brightpearl) an item just so that they can take a picture to be used by social media.
Many retailers have gone over and above the consumer law regulations in terms of return policies. No quibble refunds may win a brand some advocates but they are more than likely to create a magnet for fraudsters who will think of nothing of buying products, using them and then returning them. Most online retailers in the UK offer a generous returns policy that will often include free returns shipping. They need to be competitive to grab a share of retail spend away from traditional bricks and mortar stores.
Wardrobing may be a new term for an age-old practice but that still doesn’t make it any more legal or acceptable. Brands should think about how they can monitor for signs of Wardrobing – use of image detection for instance in social media could help identify serial offenders whilst the development of Blockchain-based ERP and Stock management solutions could see counter-measures being effectively introduced.
BrandShelter is able to provide monitoring services for brand holders worried about IP or reputations infringement. Please feel free to talk to us about this topic or any other that is currently causing you any concern.
