‘Summer sees a sharp increase in ‘Wardrobing’ retail fraud’

As summer approaches, a particular type of retail fraud is on the rise, known as “wardrobing.” This deceptive practice involves purchasing an expensive item, wearing it with the tags on, and then returning it for a refund. According to returns management software company Optoro, summer vacations are a prime time for shoppers to engage in wardrobing as they enhance their wardrobes.

Optoro’s CEO, Amena Ali, emphasized that during the summer and cruise season, return rates can spike significantly, with swimwear alone accounting for 5% to 15% of returns. This trend highlights the challenge for retailers in differentiating between habitual returners and fraudsters.

Optoro’s data reveals that 40% of 18-to-29-year-olds engage in wardrobing, and a significant portion of shoppers admitted to buying items for specific events only to return them afterward. The issue for retailers lies in handling these returned items effectively.

Ali emphasized the importance of quick yet thorough inspection and restocking of seasonal items like cruisewear and swimwear to retain their value before the season ends. Time sensitivity plays a crucial role in combating fraud, as delays in the return process can lead to markdowns or the need to send items to secondary retail channels.

To address the challenge posed by wardrobing, retailers are implementing strategies such as reducing return timeframes, eliminating free returns, or requiring in-store returns for inspection. Companies like Best Buy, Gap, and American Eagle Outfitters are leveraging Optoro’s reverse logistics AI software to manage returns efficiently, identify fraud, and quickly restock products.

Stephen Lamar, CEO of the American Apparel and Footwear Association, highlighted the evolving role of returns in the e-commerce era, emphasizing the importance of technology in optimizing the returns process. Optoro’s data shows that transportation accounts for 30% of return costs, prompting the adoption of strategies like third-party drop-off locations to minimize costs.

Utilizing AI in a digitized return system can help retailers identify trusted shoppers, maximize profitability by restocking like-new goods at full price, and increase recovery rates significantly. Optoro’s data indicates the diverse range of recovery improvements, with some enterprise retailers achieving up to a 45% recovery increase in certain categories.

As return rates vary across categories and brands, Optoro customers have reported the top three categories of returned items to be kitchen and dining, men’s shoes, and women’s clothing. Clothing leads the return category with a 25% rate, followed by bags, accessories, and shoes.

In conclusion, retailers are leveraging technology and innovative strategies to combat wardrobing and optimize the returns process, ultimately enhancing customer loyalty and brand perception in the competitive retail landscape.