Wardrobing - Tackling the Hidden Cost of Return Abuse

In this episode of the ECR Retail Loss “Sell More and Lose Less” podcast, host Colin Peacock talks with Professor Joe Clare from the University of Western Australia about the problem of wardrobing – where customers buy items, use them once or twice, and then return them for a full refund.

Drawing on survey research with over 2,500 respondents, Joe explains how common wardrobing is, what kinds of products are most affected, and how offenders rationalise this behaviour as “victimless”.

They discuss what retailers can do to spot non-random patterns in their returns data, identify high-risk products and high-frequency returners, and design practical interventions – from policy changes and return fees to better tagging and even new rental models – to reduce the impact of wardrobing while supporting sustainability and circular economy goals.

Cleaned transcript

Introductions and context

COLIN:

Hello, and this week on the ECR Retail Loss podcast, we’re talking about and discussing the topic of wardrobing.

I’m joined by Professor Joe Clare from the University of Western Australia, and we’re looking at covering the scale and nature of the problem, the responses from retailers, and some of the successes that they might have seen and are looking forward to seeing as they tackle this complex problem.

JOE:

So I’m a professor of criminology working at the University of Western Australia.

I’ve been interested in stolen goods and high-value items and things that people are interested in acquiring through acquisitive crime. I’ve been looking at this on and off now for about 20 years, one way or another, I think.

About three years or so ago, working with Professor Mike Townsley from Griffith University, I got interested in the returns space and working in the retail sector, trying to understand how we can apply frameworks that have worked well for crime prevention generally to the workspace that retailers are dealing with on a day-to-day basis.

So that’s where I’m coming from. And working thankfully with ECR and working with Mike over at Griffith, we’re just about to finish a project that’s been looking at return frauds across a number of different categories, and one of which was wardrobing.

We ran a big survey and we asked people about their customer return behaviours. The way that we defined wardrobing in that space was a situation where a customer purchases an item of clothing, wears it once or twice and then returns it for a full refund. That’s the space we were trying to get them thinking about.

And what we were asking them was, “Have you ever done this?” That’s the jumping-off question.

Broadening the definition of wardrobing

COLIN:

Before we do that, I think there are other forms of products that are also wardrobed, correct?

We’ve heard quite a few of those, from tents to coats to skis. What other weird ones have you heard?

JOE:

Interesting, yes. In the responses that we got from people in the survey, it seemed like almost all sorts of things could have been used.

But it basically comes down to: I just wanted to use it and I don’t want to keep it.

So there were electronic items that people might have used. Camping equipment was another one. Those exact types of things where you’re like, “I don’t need my sleeping bag any more because I’m not planning to go camping again and I just wanted to have it for the weekend.”

It’s almost like an interesting version of renting, I think. My sense with this particular type of fraud – and we got this from the survey respondents – is that there’s a perception that it’s sort of victimless in a way, because you’re giving it back, so what’s the big deal?

Relative to some of the other types of return fraud, where you are quite clearly keeping an item and sending back an empty box or whatever it might be, in this space it’s much easier to neutralise. As a result, the potential prevalence of this within the general returning community is probably a lot higher than a number of those other types.

COLIN:

I guess you’re saying that people would say, “Well, I would have rented it if you could have let me. I would have paid to rent it.”

JOE:

Yeah, absolutely. I get that.

As we know from crime, one of the things that’s important from an offending perspective, from a decision-making perspective, is the immediacy of the ability of people to be able to rationalise or neutralise the behaviour and the choices they’ve made.

I think this is a much easier one to convince yourself isn’t really a problem, relative to some other types of return fraud.

Is wardrobing really fraud?

COLIN:

So should retail… I mean, you’ve said you think in your mind it is a fraud. You think it’s a returns fraud.

Some people would say it’s abusive returns, but it’s not fraudulent.

JOE:

Yes, I had an interesting conversation with a colleague of mine who’s a lawyer who said, “That’s not fraud at all.” So from a legal perspective maybe it doesn’t meet that requirement.

It’s an interesting thing to think through.

I think I’m coming at it from the perspective of things we would rather not have happening any more, and things we would try to minimise, if that makes sense.

COLIN:

Well, and certainly there’s a cost to it. But let’s move on to the second piece, which is: how do we get a sense, a grip, in terms of how big this is?

How big is the wardrobing problem?

JOE:

Yes, that’s an excellent question.

We asked a big sample of people – just over 2,500 – from a number of different areas in the world, about their engagement with this type of behaviour from a returns perspective. And just over 14% of them said that they had done it at least once.

Patterns then came out of that group. We asked them a whole range of questions about what types of things they took.

What we found is that, just like we find with other forms of deviance or crime problems, most people don’t do it, some people do it sometimes, and then there’s a small group of people who do it a lot. That’s a typical pattern that we would see across offending generally.

Eighty-seven percent of the time, the people in our survey said that they had been involved with clothing. So it is apparel – it’s not only apparel, but it’s high frequency that it’s engaged with clothing-related stuff.

Around half of them who said they’d done it said that they’d done it before and been successful or had been advised to do it. Another third had been advised to do it from family and friends.

Interestingly, they were selecting products from shops where they knew that the shops had a reasonably lenient reputation for easy returns. They had familiarity with the store’s policies and they’d previously had successful returns at those retailers.

Ninety-seven percent of them said they had no problems at all. When they returned the products, they were given their money back. And two-thirds of them said that they would be likely to engage in that behaviour again.

Using data to spot non-random patterns

JOE:

So I guess, how does that translate through to things that retailers could do?

It would be starting to look for these non-random patterns in their own data as much as they can find them. Looking for certain types of goods that are high-risk or high-likelihood of being engaged in this type of return practice – whether we call it fraud or not.

Looking for people who are repeat customers who are continually bringing back, particularly if the repeat returners are overlapping with the repeat high-risk products that are being selected for this type of return behaviour.

That would be how you would start to use information that you’re already collecting to try and target your efforts from a prevention perspective. You’d try to design out the likelihood that these individuals, who are doing this a lot for certain types of goods, are able to continue doing that same behaviour.

Store versus online: where does wardrobing happen?

COLIN:

One of the interesting things that we had – I don’t know where this fits into it – but I remember having this conversation with retailers about where this problem manifests itself.

Are people doing this at the store? They’re coming in, they’re buying something and then using it and taking it back to the store? Or are they doing it online and then returning online?

The sense I got from the retailers – and this is just a sense – was that the majority of it was the store. People were wardrobing from products that they’ve bought in the store.

JOE:

That’s right, and that was supported by the findings of our survey as well, Colin.

We asked people, from a purchase / refund combo: did you buy it in store and return it in store, did you buy it online and return it online, or did you use a combination of those two things?

Of the people who were engaging in wardrobing, 60% of them were doing this exclusively in store. So they weren’t in online environments; they were buying things in physical outlets and returning them to physical outlets after they had used them for what they wanted to use them for.

So it’s definitely something which is appearing in that face-to-face environment of a retail outlet.

COLIN:

Which, I guess, makes prevention probably quite problematic, right?

In terms of, you know, “You look like someone’s going to return it; better make sure you don’t use it,” you know?

JOE:

Right, yes. So it’s definitely presenting that point of contact with a physical person in an outlet, in a way that’s different from some people still doing this by putting it in bags and sending it back through whatever the delivery supply system is.

But a lot of it is ending up in retail outlets.

What deters wardrobing?

JOE:

From a prevention perspective, we asked people some things about what they think would be likely to deter them from, or be effective in preventing them from, engaging in this behaviour in the future.

Interestingly, the things that they thought were the most effective, out of the list of options we gave them, were:

• Being charged a return fee; and
• Being contacted by a company investigator for a review.

Both of those things could be policy-related. They’re things that shops could look to enforce, particularly if you start to combine them with the non-randomness of the types of goods that are likely to be engaged in these types of return behaviours – the high-risk target goods – and also combining with that information about the fact that lots of people don’t do this and a few people are doing it a lot.

So you could start to target your efforts on prevention, combining those practices around fees or investigation with your high-frequency returners who are bringing back these items that are known to be highly likely to be selected for wardrobing.

So you might get away with it once, but the next time it’s going to be problematic for you.

COLIN:

I get that. That’s interesting.

On-the-ground interventions and examples

COLIN:

Tell me, what are some of the interventions that you’ve asked the consumers? What are you seeing out there in terms of what retailers are doing?

I think I’ve seen Bloomingdale’s, on their care label or swing ticket, put, “This label must be returned. You cannot remove this label if you want to return it.”

Have you seen other things?

JOE:

Yes, things along those lines. Particularly, it’s the placement of those prevention tags that is really important as well.

Putting them on in places that would prevent somebody wearing them. It doesn’t prevent them trying something on and seeing if it fits and does the job they want it to do, but it would definitely be very problematic to be able to try and use that garment in a way which isn’t clearly identifying that you’ve got a tag attached to it.

I have heard of certain retailers who are already engaging in this sort of active investigation of high-frequency returners, to talk to them about the behaviours that they think they’re engaging in.

We know that’s effective from policing interventions, where they literally knock on the door of people who are known to be engaging in gang-related activity or high-frequency criminal behaviour. A door-knock to tell them, “We know you’re doing this,” can actually be part of an active deterrent to prevent ongoing offending behaviour.

So there are some retailers who are engaging in that type of activity.

Thinking like a wardrobe and designing out opportunities

JOE:

We also know from a different component of our research, where we spoke to a range of loss prevention professionals and asked them to help us “think thief”, or “think wardrobe”: If you were going to do this, how would you do it?

We then got them to actively design some intervention strategies for each one of those steps that you would need to engage in, to try and prevent – to design out – the capacity for individuals to keep doing it.

A lot of the things that they came up with were very doable, around ideas that could actually be quite implementable. It would just be a question of taking that process of thinking through: How are people currently doing this in your particular retail outlet? And then thinking about how you could design out some of the capacity to keep doing it the way that they are at the moment.

What we know from crime prevention generally is that some people will try another way and will be diverted to keep going. But a lot of people who find it too hard will just stop.

That doesn’t then create opportunities somewhere else. You’re not pushing the problem on to another retailer, because everybody could approach their problems in the same way – using their own data, looking for their non-random risk, looking at what they know about the non-randomness of offending behaviour about returns, and then trying to design out the script process within their own retail outlet.

If everybody did that, then that would make the problem much less likely to continue.

COLIN:

Well, you tease me now. What were one or two of the ideas that came out?

JOE:

They’re not earth-shattering in the sense that people will hear them and think, “Oh yeah, that makes sense.”

But it’s things like:

• Strengthening your returns policy.
• Benchmarking to see how other competitors are dealing with the same types of things.

There’s no harm, I wouldn’t have thought, in sharing information about high-frequency goods that they think are getting involved in these types of things, and talking about strategies. If it works to prevent it at one retailer, we could do the same thing somewhere else. This would actually be a benefit for everybody involved.

Connection of things like loyalty programmes, which then would give you an increased capacity for customer profiling.

If you know more by encouraging adoption of loyalty programmes, you can then use customer profiles to look for, maybe, flagging unusual return practices – particularly combined with those high-frequency goods that are at risk.

Working with manufacturers at that earlier supply-chain stage to build in more packaging and tamper control, so that you don’t have to be both the retailer and the person trying to implement all the strategies at the same time. You design them in early, in pockets and things like that or whatever it might be.

COLIN:

Absolutely.

JOE:

In a way which doesn’t damage the goods but is designed to try and reduce the suitability of them for the thing that you want them to do – which is to use them and bring them back and pretend you didn’t use them.

Mindset and process for retailers

COLIN:

I guess we could carry on with the brainstorming, but I think you’ve given some good examples there.

It’s that process that I think retailers can adopt, which is: act or be a wardrobe and start to imagine all the things that need to be true for you to be successful.

Consider whether the return fee would be a disincentive.

Really interesting.

Wardrobing, sustainability and new opportunities

COLIN:

At the end of the day, maybe at more of these college balls and university galas there’ll be more people buying dresses and suits in the future, if we get this right in the industry.

Or maybe it opens a whole new sector for some of these retailers, where they actually create an opportunity for renting some of these things, and actually have a process where you let that happen.

JOE:

If there is a niche and a demand in the market for people to do that, then make it so that it’s not a problem any more, but you actually have some sort of model where you charge a reduced premium, but people are expected to bring things back. It could be an opportunity.

COLIN:

I think that’s a really good point as well. As you are very aware, the whole sustainability piece and circular economy is high on people’s minds, and it’s clearly a priority for younger people as well, based on the research.

So, to your point, maybe this is a cry for help.

JOE:

Maybe it is. It could be an opportunity, Colin, as much as anything else.

Closing remarks

COLIN:

Absolutely.

Well, Joe, it’s been an absolute pleasure to be with you on this podcast. Really great to hear your learnings on the world of wardrobing. Some really great ideas in there as well, and a way of thinking about it that I think retailers can adopt. Hopefully we’ll see you soon.

JOE:

Thank you very much indeed. Thank you very much for the opportunity, Colin. It’s a pleasure.