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The phenomenon of “wardrobing” — purchasing an expensive item, using it, and then returning it while it still appears new — sees a notable increase during the summer months. This trend is especially pronounced as consumers prepare for holiday seasons, according to insights from returns management firm Optoro.
Amena Ali, CEO of Optoro, notes that between July and September, which aligns with the summer and cruise travel season, there is a significant spike in return rates, sometimes tripling. Swimwear alone makes up 5% to 15% of these returns, illustrating the blurred lines between habitual returners and outright fraudsters.
Optoro’s analyses indicate that a substantial portion of wardrobes, especially among consumers aged 18 to 29, contain items prone to such return abuses. A survey conducted by Optoro in November 2023 revealed that 30% of consumers admitted to buying clothes specifically for a single event, only to return them afterwards.
The real challenge for retailers lies in managing these returns efficiently. Ali emphasizes the importance of a quick and thorough inspection process for seasonal items like swimwear to maintain their value throughout the season. Catching fraud early, ideally at the point of return, is crucial.
Ali further highlighted the consequences of delays in the returns process, which can lead to significant markdowns or necessitate the transfer of goods to secondary markets like discount retailers or liquidators.
When discussing the fate of returned items, Ali pointed out that the value and condition of the item dictate the next steps. Low-value items in poor condition might not be worth the cost of refurbishment and are better suited for resale, donation, or recycling.
Scot Case, the executive director of the Center for Retail Sustainability at the National Retail Federation, added that wardrobing not only increases costs for retailers but also contributes to waste if the returned products cannot be resold. In response, some retailers are shortening the allowed return periods, eliminating free returns, or mandating in-store returns where items can be inspected immediately.
Optoro leverages AI-driven logistics software to help clients like Best Buy, American Eagle, and other retailers manage returns more effectively, swiftly identifying fraud and restocking items to prevent loss through markdowns.
Stephen Lamar, CEO of the American Apparel and Footwear Association, also weighed in, noting the challenge of returns in the digital shopping age. He discussed how AI and supply chain innovations are increasingly important in helping consumers access desired fashion efficiently, thereby supporting sustainable practices like take-back programs for resale and reuse.
Optoro’s data highlights the significant cost of transportation in returns, with about 30% of the total cost of a return attributed to logistics. To mitigate these expenses, innovative strategies such as third-party drop-off points and simplified, label-free return processes are being adopted.
Ali underscores the potential of AI in streamlining the returns process, reducing handling, and ensuring that products suitable for full-price resale are quickly identified and restocked.
In terms of economic impact, Optoro’s data reveals that while a significant portion of non-resalable goods end up in secondary channels, a focused improvement strategy in handling returns can lead to substantial financial recovery, particularly for high-volume retailers.
The issues surrounding returns are complex, varying significantly across different categories and retailers. Apparel remains a leading category in return rates, followed by categories like handbags, accessories, and consumer electronics.
This detailed insight into the dynamics of retail returns and wardrobing fraud underscores the ongoing challenges and strategies essential for modern retail operations.
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