Magazine Article | August 21, 2013

Building LP From The Ground Up

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By Matt Pillar, editor-in-chief, Integrated Solutions For Retailers

September 2013 Integrated Solutions For Retailers

After 25 years of minimal LP investment, $2.5 billion fashion retailer Chico’s came to grips with its internal shrink.

As the proverb says, necessity is the mother of invention. In the case of Chico’s LP program, it’s the mother of reinvention. As was the case for many, the 30-year-old luxury fashion retailer found just cause to reinvent its shrink control measures in 2008, when it became a necessity to fiercely protect every dollar. Over the past five years, the company’s efforts have led to a significant decline in shrink.

Shrink: Easily Back-Burnered When You’re Flush With Cash
Back in 2007, before the economy rocketed fullsteam into a multitrillion-dollar black hole, Chico’s was a darling of Wall Street. In those years leading up to the recession, double-digit growth was the rule for the relatively young retailer. The company was so focused on the fiscal growth it enjoyed, limited attention was paid to LP. It supported a small LP staff, supplemented by a few outsourced service providers. Stores had a few cameras, but there was no comprehensive video surveillance system, no EAS, and POS exception reporting was rudimentary. Chico’s was so focused on the customer experience — and the rewards of its astronomical sales figures — investing more resources in LP seemed more encumbrance than necessity. As far as the company was concerned, its shrink figures were in line with industry norms and merely a cost of doing business in high-fashion retail.

By 2008, those halcyon days came to an end for everyone. Sales receded. Discretionary spending stopped. The flow of money was scrutinized from every angle in attempts to save. For Chico’s, that scrutiny put loss prevention in the spotlight. In a period of fiscal conservation, it was time to address the dollars unaccounted for. It was time to double down on LP.

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