Chances are that your friend's snazzy new TV -- the one you watched the Super Bowl on -- won't be there the next time you visit. That's because more consumers are capitalizing on retailers' lenient return policies to watch pro football's championship match on state-of-the-art TVs they can't afford by buying, using and then returning them after the big game.
"Wardrobing" -- the practice of returning nondefective used merchandise -- constitutes a form of retail fraud that 33.1 percent of companies surveyed by the National Retail Federation said they experienced in 2018.
"It's funny how it's taken over. It's showing off, it's putting a big old TV up on your wall for your Super Bowl party whether you can afford it or not," said Sean Cleland, vice president of mobile for liquidation company B-Stock.
Data backs up this trend. TV returns have jumped 20 percent from the fourth quarter (October-December) to the first quarter (January-March) every year for the past three years, bringing the overall return rate to about 25 percent for the year's first three months, B-Stock reports.
"The Super Bowl is a big time for us. The jump in the volume of returns that we see is pretty significant," Cleland said. "It's definitely a driver of wardrobing. This has been a trend for the past few years."
Blame online sellers
The cost of returns is high -- they're considered lost sales to retailers, whose profits and margin percentages are automatically reduced when they're forced to sell open-box goods. Further, inspecting and restocking items drives up labor costs.
Roughly $369 billion worth of merchandise was returned in the U.S. over the past year, according to an Appriss Retail report. Yet flexible return policies are a core component of retailers' relationships with consumers.
"It's tricky for retailers because they're competing with the online sellers of the world who have liberal, lax return policies that force them into providing a similar customer experience," Cleland said. "It has created a glut of returns post-Super Bowl," he said.
"It's crummy for the retailer but creates a strong sense of loyalty for the customer," he said. "It's just a sacrifice they're willing to make.
Electronics retailers use the annual Super Bowl to offer consumers heavy promotions on the latest TVs and other equipment. "This time of year, pre-Super Bowl, they're getting extremely competitive with promotions and markdowns," Cleland said. "And TVs are definitely king this time of year."
Consumers can save hundreds and even thousands of dollars if they upgrade their TVs now. A Samsung 75-inch LED 4K TV, which was originally listed for $1,699.99 at Best Buy is on sale for $1,299.99.
Other deals include:
- A VIZIO 80-inch Class 4K set on sale at Walmart for $1,998 is marked down from $2,998.
- An LG 86-inch Class 4K TV is on sale at Walmart for $2,497, down from $4,497.
The Super Bowl falls after January's Consumer Electronics Show, where new products are unveiled and slated to hit shelves around summertime. So retailers are eager to clear their shelves by getting old models out the door as consumers set their sights on the newest versions.
Point of no return?
In response to the buy-watch-and return trend, a number of retailers are enlisting companies that help them track consumer habits to identify individuals who might try this manuever. A company called The Retail Equation calculates individual "risk scores" that retailers can use to deny customers the right to return merchandise.
"It's a relatively new phenomenon -- the process of banning people from making returns," said Robert Moraca, vice president of loss prevention for the National Retail Federation. "You've got to be really outside the norm to get onto that list."
He said generally, it's in retailers' best interest to allow returns -- within reason.
"Many don't because they want to balance the consumer purchasing experience with the return experience," he said. "You want people to come in and have a good, positive shopping experience. When they come to make a return, you want to make it swift, efficient and hopefully that will keep them coming back."