Milford company specializes in reducing retail theft
Inventory shrinkage, a catch-all phrase that includes employee theft, shoplifting, vendor fraud and administrative error, cost U.S. retailers a record $41.6 billion last year, according to the National Retail Security Survey.
Breaking down that amount, employee theft accounted for $19.5 billion, which represented almost half of the losses (47 percent), while shoplifting accounted for $13.3 billion, or about one third of the losses (32 percent).
Despite those grim statistics, there's no need for retailers to be at a loss over how to deal with loss prevention, according to LP Innovations. The Milford-based company provides loss prevention solutions for the retail industry nationwide, and has been producing results for its customers since its start almost 10 years ago.
On average, LP Innovations - the initials stand for "Loss Prevention'' - has reduced inventory shrinkage by 25 to 30 percent within the first year with its full-services program, according to John Fice, the company's chief operating officer.
One retailer saw its shrinkage drop from 4.5 percent to 1.5 percent during a three-year period, resulting in a cumulative earnings improvement of $4.6 million, adds Rubin Press, LPI's vice president of sales and marketing.
The company even guarantees results. "We'll say to a retailer, 'Here's your shrinkage,' '' relates Press. "We then say, 'We guarantee we'll reduce that shrinkage from x to y.' If we don't reduce a loss by minimally that amount, we'll provide the difference.''
Since this contract guarantee was instituted six months ago, LPI has yet to make a payback, according to Press.
The company tackles loss prevention from all angles through its full-service program. Offerings include audits, investigations and analysis. Customers also gain immediate access to loss prevention specialists trained to reduce a store's shrinkage and operational costs. LPI experts also work onsite.
Training is particularly important, according to Fice. This training includes providing better customer service, he says. "Employees approaching customers when they walk into the store and checking back with them a few minutes later - that kind of customer service will prevent shoplifting better than any cloak-and-dagger method,'' he says.
Adds Press, "One of the biggest challenges retail stores have is visibility in the stores... (LPI services) give them visibility of what's happening in their stores without them having to be there.''
Awareness, meanwhile, can deter employee theft. A staff trained to know what to look for and an auditing process will serve as a powerful deterrent, according to Fice.
That LPI knows the ins and outs of loss prevention is no surprise since the majority of employees have on average 10 years of experience in the LP business. The four founders - CEO and president Steven May, director of business development David Johnston, director of field services Timothy Casey and Fice - all worked in the loss prevention department for a retail company that has since been purchased by the Casual Male Retail Group.
The founders saw a need for their services beyond the confines of one company and LPI was created. "We simply took our skills and started using them as an outsource service,'' says Fice.
Nearly 10 years later, the company remains the only firm offering loss prevention services to the retail industry nationwide, according to Press.
Before LPI started, retailers typically had to provide loss prevention services in-house with a large price tag attached. "We can offer more services for less money than it would cost to put their own people in,'' says Fice.
Adds Press, "We have the infrastructure in place. We already have the trained individuals. We have a 10-year history of success. Putting that all together makes for an easy decision for certain retailers to go with an outsourced solution.''
The typical LPI customer is a mid-sized retailer with 50 to 300 stores nationwide. The company's clientele currently numbers 55 and includes such retailers as Yankee Candle, The Limited and, interestingly enough, The Casual Male, owned by the Casual Male Retail Group.
LPI's customers represent a wide range of retailers from restaurants to big-box department stores, hailing from both the East and West Coasts, the South and the Midwest.
Its 45-person field staff can cover any major metropolitan market in the United States.
For LPI's services, retailers typically pay a fee per store per month based on the amount of services requested. The fee can vary from store to store since some stores may require more services than others. Also, the fee can vary from season to season since different services may be required during different times of the year.
Retailers can set their budget based on their needs so they know exactly how much they're going to the spend during the course of the contract, Fice notes.
On average, for LPI's basic program, a retailer with 100 to 150 stores pays $150 per month per store.
LPI complements such technical security as alarms and cameras, according to Press. What its program does is maximize a store's current resources by training its staff in ways to minimize theft without spending an exorbitant amount of money on high-tech gadgets, he says.
Adds Fice, "We teach associates how to run a better store and assist them in finding, investigating and preventing losses.''
While LPI can assist companies in researching credit card fraud, it concentrates on product theft, not credit card theft.
As LP Innovations enters its 10th year, it plans to build on its current services including one geared to rate customer service and another to test employee integrity. The current plan is clearly working. This year, revenue has grown 30 to 40 percent due to new business, according to Press.
"Retailers want aggressive growth,'' says Fice, and any program that assists in that goal effectively and efficiently is more than welcome.
Says Press, "They've taken the mind-set of being more proactive than reactive. In the past, they just reacted to problems and tried to resolve them. Now they're trying to plan and prepare before the problem happens.''
Bob Tremblay can be reached at email@example.com or 508-626-4409.
CEO and president: Steven May
Industry: Retail loss prevention
Company background: Based in Milford, LP Innovations provides loss prevention solutions for the retail industry nationwide. Its Web site is www.lpinnovations.com.