FINANCE

NRF puts holiday return fraud at $3.4 billion

BY Marianne Wilson

Washington, D.C. — The retail industry will lose an estimated $8.76 billion to return fraud this year, and $3.39 billion during the holiday season alone, according to the National Retail Federation’s 2013 Return Fraud Survey. Overall, 5.8% of holiday returns are fraudulent, up slightly from 4.6% last year.

“Recent efforts to combat fraudulent activity are slowly starting to work, but criminals are becoming more savvy and technologically advanced in their methods, making it even more difficult for retailers and law enforcement to keep up with the growing problem said NRF VP of loss prevention Rich Mellor.”

In survey results, nearly all (94.8%) retailers polled say they have experienced the return of stolen merchandise in the last year, and 69.0% report that they have experienced the return of merchandise purchased on fraudulent or stolen tender. Additionally, 29.3% have found criminals using counterfeit receipts to return merchandise.

Employee return fraud or collusion with external sources is also a big problem for retailers: nine-in-10 (93.1%) report they’ve dealt with this issue in the past year.

For the first time, NRF asked retailers about their experiences with return fraud and a connection to organized retail crime groups: 60.3% have experienced this in the past year.


One of the biggest issues for retailers is the practice of ‘wardrobing,’ or the return of used, non-defective merchandise like special occasion apparel and certain electronics. Many companies have employed specific tactics to help curb this unethical practice, and are beginning to see the fruits of their labor: 62.1% report having been victims of wardrobing, down from 64.9% last year.

The survey found 15.5% say they have dealt with e-receipt return fraud. And, as online sales continue to grow, 82.5% say they allow customers to return merchandise purchased online in their stores.

The problem of return fraud has forced many retailers to adopt policies which require customers returning merchandise to show identification. Retailers estimate that 13.97% of the returns made throughout the year without a receipt are fraudulent and, as a result, nearly three-quarters (73.7%) now require customers returning items without a receipt to show identification.

When asked about return fraud and the various types of tender, almost half (49.1%) say they have witnessed an increase in gift cards/store merchandise credit fraud in the past year. One-in-five (19.6%) say they have seen a decrease in the fraudulent use of cash, but more than a quarter (26.8%) have seen an increase; half report no change (48.2%).

Additionally, three-in-10 (29.1%) say they’ve witnessed an increase in credit card fraud, 18.2% say those incidents have decreased and more than half (52.7%) say there’s no change from last year.

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AmazonFresh may be heading to San Francisco

BY CSA STAFF

Amazon’s fresh food delivery service may be expanding to San Francisco, according to published reports.

All Things Digital, a Dow Jones-owned website that reports on technology news, reported on several sightings in San Francisco of AmazonFresh trucks, as well as a recent job posting.

According to the site, Amazon plans to announce the service’s launch on Tuesday. Amazon began offering the service in Seattle and recently expanded it to Los Angeles. AmazonFresh allows users to shop online for produce, dairy products, dry goods and others.

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American Eagle looks to take flight with new merchant

BY CSA STAFF

Chad Kessler was named chief merchandising and design officer at American Eagle Outfitters after the company reported a big decline in third-quarter profits and said it expects fourth quarter same-store sales to decline.

American Eagle Outfitters, which operates more than 1,000 stores in the U.S. and select international markets, said its third-quarter sales declined 6% to $857 million and same-store sales fell 5%. Profits from continuing operations fell to $24.9 million from $82.4 million and earnings per share, adjusted to exclude a six cent a share charge related to the closure of a distribution center, declined to 19 cents from 41 cents a share last year.

“Our financial performance is clearly unsatisfactory and not consistent with our objectives,” said American Eagle CEO Robert Hanson. “As we continue to navigate through an intensely promotional North American retail landscape, we are making improvements in merchandising and marketing, while aggressively pursuing efficiency gains, expense reductions and ensuring disciplined inventory management. We are continuing to invest in important areas of growth including omni-channel, global expansion and factory stores — all high-return segments, which diversify our business and will be key drivers of our future growth and success.”

The changes won’t have an immediate impact on the company’s performance, however, as Hanson forecast a fourth-quarter same-store sales decline in the mid-single digits. Going forward, American Eagle will rely on new head merchant Kessler to provide shoppers a more compelling product offering and reverse sales trends.

“Chad is a top talent in the business, bringing us a depth of experience in U.S. specialty youth brands, as well as recent experiences in global luxury and multichannel merchandising and design,” Hanson said regarding Kessler’s hiring. “He will be an incredible asset and will complement our highly talented team. I look forward to his many contributions as we continue our work to fortify and transform American Eagle Outfitters to a global, omni-channel brand.”

Kessler joins American Eagle with an extensive background in apparel retailing, most recently serving as SVP of corporate merchandising for Coach from 2010 to 2011 and prior to that as chief merchandising officer for Urban Outfitters from 1994 to 2010. He also held merchandising roles at Abercrombie & Fitch.

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