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Loss Prevention for Chico’s FAS - A Case Study

Thursday, 31 January 2013 10:55 Protection 1

Retail loss prevention departments face many challenges. Employee theft remains the largest source of shrink, and shoplifting - especially related to organized retail crime - shows no sign of slowing. With shrinking budgets and headcounts, the most successful loss prevention departments must learn how to do more with fewer resources and show ROI on their budget investments.

Leo Doran, vice president of loss prevention (LP) for Chico's FAS, turned to Protection 1 for help in designing a solution to help his team curb shrink. The solution needed to be efficiently managed with their current headcount and utilize technologies that fit their budget. Doran manages a team of five regional LP Managers, a Corporate LP Manager, a Distribution Center LP Manager, two Analysts and three Corporate LP Specialists. . With over 1,200 store locations, each member of the team is already tasked to their limit, so the solution needed to be one that could easily be managed and not create additional workload or require additional headcount.

When Doran joined Chico's five years ago, they really didn't have an LP program in place. Doran hired a team of regional LP managers as a first step. Chico's does not use Electronic Article Surveillance (EAS) because, as a specialty retailer with emphasis on the customer experience and many fine, delicate fabrics included in their merchandise offering, EAS does not fit their business. In order to combat shrink, Doran had the LP team focus on investigations of potential employee theft and store audits. He deployed a point of sale exception monitoring platform across their enterprise that has done a good job of pointing them toward suspicious activity. He also installed closed circuit television (CCTV) equipment in 50 stores to do remote investigations and store audits at high activity stores.

In addition, Doran instituted store audit checklists via video for a list of loss prevention procedures to gauge store compliance. Audit reports are distributed to region LP managers, and audit results are shared with store managers. Store managers and employees are aware of the remote store audits and don't know when they are being conducted, so store-level behavior has migrated to being as "audit-ready" as possible at all times. The store audit checklist includes:

  • Are customers being engaged when they walk in the store?
  • Are associate personal belongings being checked before they leave at store closing?
  • Look at back room stock levels – is new merchandise getting out on the floor as soon as possible?
  • Is trash discarded? Are fire exits clear?

Issues found during compliance audits are documented and re-training is completed at the store level as required.

Doran felt that concentrating on employee investigations and store audits was the right plan. However, the CCTV platform that Chico's had deployed at higher volume stores in the past did not allow them to access associated video quickly or easily, and was not optimal for speedy case building and resolution. This was due to two factors. First, because of huge file sizes associated with the older video equipment, requests for video clips had to be made and downloaded from the store DVR over the network in overnight hours. Oftentimes, these clip requests from the video recorder would time-out before downloading, or the video would not produce anticipated results and a new request for video had to be made. Case investigations would take a week or more. Secondly, video file management and distribution was cumbersome, requiring case video to be saved to CD's for manual distribution.

Protection 1 National Account Manager Tom Fox – who oversees the Chico's account – focused on technology to improve video investigation efficiency as the key to enable more case investigations. Fox felt sure he could help Chico's deploy a new, state-of-the-art video equipment platform that would optimize Chico's investigation process while providing an ROI that would allow equipment to be installed across more store locations.

Fox recommended the 3VR S-Series Hybrid appliances with an average of eight analog cameras per store from Innotech (includes one to two pan tilt zoom cameras). The 3VR client software application used is called "3VR OpCenter," which provides Chico's the tools to manage and view all the stores across their enterprise, while also providing their users with a "Google-like" search engine, helping to dramatically reduce the time required to search, package and share evidence related to investigations. Fox was convinced that 3VR's case management tools would allow Chico's to compile investigations easily and greatly increase case resolution efficiency.

Fox worked with Chico's corporate loss prevention analyst Sean Owens on a plan to replace a few of the 50 existing CCTV systems with the 3VR solution and test the results. The findings were so dramatic that Chico's has installed over 500 systems in the year following that test.

Chico's found that investigation times were reduced from up to a week to as little as 20 minutes from beginning to end, utilizing all the 3VR tools available. Chico's is able to conduct a higher number and more timely investigations and has seen a huge reduction in employee-related shrink as a result. Doran's team is proud to point out that their number of employee theft cases, as well as the average case dollar amount, has decreased substantially since the beginning of the program.

"We are able to investigate so many more cases, and employees see that we are on top of any incidents quickly," said Doran. "We make sure employee awareness of the exception monitoring software and video surveillance platform is at a high level. Employees understand that, and it helps them to do the right thing."

In addition, Doran came up with an idea to enable larger numbers of store audits to be completed via video. He looked at the security officer headcount at his corporate campus in Fort Myers and his warehouse facilities in Atlanta. He had a total of 14 security officers at each of the two facilities to maintain the needed 24-hour coverage.

Doran thought, "Why not train these security officers to do store audits and case investigations that they could tackle during the slower hours of their shifts?" The store video recorders are all available across the corporate network, so there was no need for the security officers to be at the stores to help in this way. Doran sent Owens to thoroughly train the security officers on audit protocols and 3VR recorder and case management software functionality. He also deployed processes to communicate store audit schedules and audit time frames. Once training was complete, the Chico's team used the security officers as an integral part of their loss prevention team, and the results have been extremely positive.

"The security officers feel like a part of our team, and they really enjoy the video research part of their jobs," said Doran. "Some of the security officers have gotten so good at auditing that they have also developed employee cases for us. They may have seen something in their audit that caused them to dig deeper, and found employee dishonesty and fraud cases. They have gotten really good at video investigation."

Doran's LP team has developed a friendly internal competition between the security officers on the number of audits completed. Enabled by the the new 3VR platform, the security officer team has performed and documented over 1,000 store audits in 12 months.

The ROI on the project has been excellent from the start. "We have installed over 500 store locations with the new 3VR platform, and Protection 1 did not miss a single installation date through the entire project," said Doran. "Within the first inventory period, 90% of our CCTV installations go from being in the highest shrink store category to at or below chain average. Our leadership has approved deployment of the new Protection 1 platform in all new and remodeled stores. We have saved millions in bottom line profit, taken our high shrink locations down to or below chain average, and achieved ROI on all of the systems installed in six to 10 months. We couldn't be more pleased with the results."

Leo_Doran-1
Leo Doran

Vice President of Loss Prevention

Chico's FAS

Loss Prevention Certification