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Hilco Asset Protection Outsourced Loss Prevention Case Study - Forever 21

 Forever 21

Hilco Asset Protection was engaged by Forever 21 to provide the follow The 8 Step Loss Prevention Process from 2004 - 2007:

  

1. Initiative Awareness & Acceptance

Boardroom and C - Level

2. Identification    

Where and What is the Shortage?

3. Quantification        

How much is it Costing?

4. Recommendation      

Processes and Systems

5. Measurement Criteria     

What Defines Success?

6. Improve Shareholder Value      

ROI & Profit Improvement

7. Implementation     

Implement Solution

8. Maintenance & Modify      

Maintain and Improve Results

Step 1 – Elevate Awareness and Enhance Culture

  • 188 Store “National” Retailer
  • Estimated $775 Million Annual Gross Sales
  • Key Focus:  Internal Shrink Reduction (Theft & Operational)
  • Inventory Shortage:  1.2% (50% Internal  - 50% External shortage)

Step 2 – Identification

  • What is being stolen and where is it being stolen from?
  • External?
  • Employee-related?
  • Vendor related?

Step 3 – Quantification.  How much is it costing the company?

  • Estimated Annual Sales $775 million
  • Total Shortage   1.2%
  • Total Shortage in dollars $9.3 Million
  • 50% Internal/Employee Shortage $4.7 Million

Step 4 – Recommendations

  • Orient, align and recognize employees
  • Identify and assign high risk locations (80% of loss occurs in 20% of locations)
  • Create a collaborative “Target Store” solution
  • Audit Policy Compliance
  • Investigate all reports of loss
  • Establish Zero Tolerance to Theft

Step 5 – Measurement Criteria.   Define Success!

  • Audit Results
  • Shrink Reduction Goals (Reduction of .25%)
  • Reduction in Voids, No Sales, etc… (Critical - POS Monitoring)
  • Reduce Turnover

Step 6 Shareholder Value Opportunity.  ROI Summary

  • Internal Shrink $9.3 Million
  • Impact from Solution -25%
  • Total Profit Opportunity $ 2.3 Million
  • Profit Opportunity per Store $ 12,700
  • Projected ROI 6 Months

Step 7 – Implementation.  Steps Include:

  • Phase 1 – Proof of Concept – POC Group to Quantify Impacts& Results
  • Phase 2 – Pilot Groups – Fine-tune Installation, Training &Internal Resource
  • Phase 3 – Rollout to Remaining Store

Step 8 – Maintenance/Modify

  • System can be serviced “remotely” for quick resolution of problem
  • System/Process audits will be conducted monthly
  • On-going Training will be conducted on a quarterly basis
  • Warranty Periods and Post-Sale Support
  • Again, Be Complete and Specific with Target Dates, Etc.

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