The Costs of “Wardrobing”

According to the National Retail Federation’s annual survey, it is estimated the industry loses approximately $9.1 billion yearly in return fraud.  This includes refunds on merchandising that has been stolen and a practice like “wardrobing” that is costing retailers this incredible amount. Those incidents are done by employees as well as shoppers and shoplifters.  To read more about this topic follow the links below for more information.

NOT-SO-HAPPY RETURNS: RETAIL FEDERATION HIGHLIGHTS “WARDROBING” COSTS

In a new survey, the National Retail Federation says that holiday-return fraud could end up costing stores billions this year. The worst part? This scam is more organized than ever.

The holidays are over, but stores big and small will be dealing with more than the memories.

That’s according to the National Retail Federation (NRF), which reported late last month that during the holiday season alone, retailers could face as much as $3.8 billion in lost revenue from fraudulent returns, an increase from $3.4 billion in 2013 and a big chunk of the estimated $10.9 billion in return fraud in 2014 as a whole.

The organization’s 2014 Return Fraud Survey [PDF], which gathered responses from loss-prevention executives at 60 retailers, shows that retailers suspect that 5.5 percent of holiday returns are fraudulent. And while technology has helped curb illegitimate returns, NRF said, there’s only so much companies can do about retail fraud, which is often suspected to be the work of crime rings.

Eliminate the Practice of Wardrobing in Your Store

Well here’s a new one to me.  The art of wardrobing.  It’s a term coined for shoppers who buy merchandise with the full intent of using it, then returning it for a full refund.  Take a read of the article as the insight is fascinating.

I was astounded to learn that “nearly two-thirds of merchants had items wardrobed in 2007, up from 56 percent the year before, the first year the National Retail Federation (NRF) started tracking the trend,” according to the article.

The term wardrobing was chosen (I’m guessing) because it stems from clothing that’s been purchased, worn and then returned.  But the article points out that wardrobing has taken on a broader meaning and is now applied to any merchandise that’s been used and then returned.

So how big is wardrobing?  The article points out that “Wardrobers want to rent the things they want or need for free, which amounts to fraud, said Richard Hollinger, a criminology professor at the University of Florida who specializes in retail theft. He said return fraud, which includes wardrobing, fake receipts, and other practices, cost retailers an estimated $10.8 billion last year, up from $9.6 billion in 2006.”