Casual Male Retail Group Case Study

...Challenge

In 2000, Casual Male Retail Group (CMRG) began to weigh the benefits of supporting an internal loss prevention department versus shifting to an outsourced model. Like most retailers, a high associate turnover rate coupled with limited internal resources challenged the retailer to keep its losses from shrink within acceptable industry levels.

"The need to reevaluate our existing loss prevention practices was clear," said Dennis Hernreich, Executive Vice President, COO and CFO, Casual Male Retail Group. "Visibility into our stores and associate activities was limited, and our shrink rate was unacceptable."

After research, CMRG determined an internal department would cost the company at least $1.8 Million annually. Not only was this option expensive, but the internal model did not enable CMRG to provide consistent, proactive coverage for all of its nationwide locations.

...Solution

CMRG chose to partner with LP Innovations (LPI), the only provider of low-cost, nationwide loss prevention solutions. A customized full-service program was quickly deployed to all store locations in the United States.

"The most important factor in our relationship is LPI's nationwide presence," said Hernreich. "LPI's resources match our store locations, which enables us to respond faster to individual stores. This has helped our program to be a tremendous success."

A highlight of the LPI solution is a target store program. Working together with CMRG district managers, LPI develops action plans which mandate frequent physical inventory counts until the shrink reduces. Of the 68 stores enrolled in the target store program in 2006, shrink was reduced by 50%, resulting in an earnings improvement of approximately $600,000.

...Results

Prior to its partnership with LPI, CMRG's shrink rate averaged 4.5%. However, since shifting to an outsourced model, shrink has been reduced on average of 70%, translating to an overall earnings improvement of $4.6 Million.

© 2009, LP Innovations, Inc.