Staying on Track

In today’s economy, loss prevention has become even more important as retailers try to control both shrink and their margins. For mall-based retailer Charlotte Russe, which operates more than 500 stores in 45 states and Puerto Rico, LP measures can grow quite extensive. From in-store investigations to corporate-level analysis, Charlotte Russe is using a unique software solution to track and analyze all of its efforts.

The company’s asset protection team is led by a senior director of asset protection and includes seven field investigators, a supply chain security division and a team of analysts. From the time an investigation is initiated through the review of analytics, aggregating the information is critical. Corporate loss prevention manager Dayna Howard says Charlotte Russe takes a “holistic” approach to LP with a true partnership between asset protection and store operations.

“Our approach on asset protection is to combat the shrink from all sides, from supply chain to field loss prevention to corporate loss prevention, where we investigate any systemic and gross profit margins errors,” she says.

Charlotte Russe offers fashionable and value-priced apparel and accessories for young women in their teens and twenties. It was acquired by private equity firm Advent International in 2009 and is now in the process of re-launching its brand.

The retailer’s loss prevention team was already using case management software by LP Software when Howard joined Charlotte Russe in 2005. Worth, Ill.-based LP Software’s Loss Prevention Management System (LPMS) was designed to monitor incidents from start through resolution.

“Incidents can be entered and managed in a centralized database and shared when needed,” says LP Software president and CEO Brian Eskra. “Having all of that information in one spot makes it easier and helps from a litigation standpoint as well.”

In the past year, Howard has broadened the use of the solution to record hotline calls and all field activities, from target store investigations and the number of associates they talk to on store visits to the conference calls that they hold.

While Charlotte Russe has established its own Retail Underground database for tracking and recording internal ORC incidents, the retailer supplements it with internal information, law enforcement and retail partnerships. Cases run through the restitution and civil recovery processes are also tracked through the system, with information submitted directly to the recovery programs. Without meticulous control over every piece of documentation or evidence, retailers can quickly lose a case — and money, Eskra says.

“When we outsourced our civil recovery and restitution collections, with the help of LPMS, we were able to show how much money we were actually getting in relation to what we were getting previously,” Howard says.

Different methods, different results
At the corporate level, Howard receives all of her regular reports and statistics directly from the case management system. Eskra says that the system offers a centralized database to track events from the initial call through the entire process. LPMS allows for integration with other vendors for exception reporting, integration, collections and background checks, providing a one-stop solution. The reports enable users to monitor issues like how many cases started in the CCTV system versus the exception reporting system.

“They can see where they are getting the majority of their cases from, and can start investing more to springboard off of that,” Eskra says. “The archiving also lets retailers get a clear picture of how they’re doing from year to year.”

Howard says the company does utilize CCTV systems and is investigating options to equip the entire chain. LPMS will be used to test their effectiveness and ROI with regards to investigations and lawsuits.

Charlotte Russe is also testing an LP Software audit tool that will help them visualize and track audit scores. The current system uses an Excel file and doesn’t offer much insight into analytics. Once the audit tool is fully implemented at every point of sale, stores will be able to directly enter audit information and maintain a plan of action. Exception reporting of register activity is already reported systemically, offering corporate LP a direct eye into what’s happening on the store level.

“A lot of the things we track are linked directly back to the stores and register activity,” Howard says. “We then look at all of our shrink numbers on a biannual basis and try to make any correlations.”

The company also launched a merchandise credit card in November that Howard says has helped Charlotte Russe reduce fraudulent refunds by more than $2 million in the first five months of 2010.

“With the economy the way it is, we all have challenges and you have to be able to justify programs and show the ROI on what you’re using,” she says. “So far we’ve been pleased with what we’re seeing, as the company just reported the lowest shrink in 10 cycles.”