Bloomingdale's Uses Black Tags To Fight 'Wardrobing'

Bloomingdale's (NYSE:M) just struck a blow against 'wardrobing,' the practice of buying clothes to wear once and then returning them for a refund. The Macy's-owned chain is introducing three-inch black plastic tags attached to clothes in a prominent, difficult-to-hide place that cannot be removed if customers intend to return them.

The National Retail Federation estimates that return fraud cost retailers $8.8 billion last year, but not every chain is willing to take such a drastic step as Bloomingdale's.

"It is a delicate balance of loss prevention and good customer service, and the relationship has to be handled with appropriate finesse," Rich Mellor, VP of loss prevention at the NRF told Bloomberg.

Especially with slow sales and increasingly lackluster projections for this year's holiday spending, retailers might see combating this sort of fraud as a worthwhile strategy to save some precious cash. In a survey conducted last November by the NRF, 65 percent of retailers reported experiencing wardrobing, a 4 percent increase from the previous year, while they suspected that 3.3 percent of all returns were fraudulent.

Some retailers have taken a less extreme approach to cutting out wardrobing. Victoria's Secret (NYSE:LTD), for instance, keeps a return database to track return patterns and help determine which customers should be refused. Others have begun using difficult to copy receipts in order to stop returns using counterfeit ones.

As expected, some Bloomingdale's customers haven't been happy with the new policy, and there have been reports of clothing being torn by the removal of the tags, leaving customers with damaged items they can't return.

But Marie Driscoll of the retail consulting firm Driscoll Advisors believes Bloomingdale's is right to take a hard stance.

"They are going to alienate customers that abuse the policy, and I don't think that is so bad," she told Bloomberg.

For more:

- See this Bloomberg story

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