Citi Trends
Overview
Citi Trends Fashion for Less is a value-priced retailer of urban apparel and accessories for men, women and children. Citi Trends operates more than 319 stores in 20 states spanning the Southeast, Midwest and Mid-Atlantic regions.
Problem
Strong store supervision is a primary deterrent to inventory shrink. However, in 2005 and 2006 a 40% turnover rate among Citi Trends store managers resulted in a big increase in their inventory shrinkage.
In the second quarter of 2007, the impact from inventory shrink was large enough to call out separately in the company’s earnings report. Shrinkage for the second quarter was about 2% of sales, compared to approximately 1.8% reported for the previous year. In certain markets, high-impact stores experienced as much as 15.8% shrink.
Between 50-70% of Citi Trends shrink problem was coming from employee theft, including product being taken out the back door, sweethearting and cashiers performing fraudulent voids. Another significant portion of loss was coming from shoplifting and burglary.
Goal
The clear mission of Citi Trends was to significantly reduce inventory shrinkage to within acceptable rates of less than 1.5%.
In addition, as a publicly traded company, it was important for Citi Trends to address the factors causing disappointing earnings for investors.
Challenges
Except for the use of expensive guard services, the problem of shrink has never been solved cost effectively. Security guards are a significant recurring cost showing little, if any, impact. The security-guard industry is plagued with issues of inconsistent training, non-existent benefits and high-turnover rates. Guards making about $29,000 a year are not providing a high-quality product, leaving people and property unprotected.
Solutions
Following a thorough Iverification™ of high-impact stores, Iverify partnered with the Citi Trends’ Loss Prevention team to design a comprehensive shrink solution.
Iverify developed a series of customized protocols, ranging from simple visual checks of back doors and cash registers to more elaborate intuitive assessments of environmental factors and human behavior.
From Iverify’s monitoring center, called The “I”, our Protection Specialists implemented these protocols, creating a customized Citi Trends inspection that visually and audibly verified locations were secure. We deployed audible guard tours to create awareness of security’s presence, implemented new backdoor procedures and completed operational audits looking for activities that may cause loss.
All information gathered by the Protection Team was communicated to the Citi Trends Loss Prevention team to let them know: this was the problem we identified and these were the steps taken to resolve it.
Technology
Iverify integrated the power of The “I” with cutting-edge technology:
- Flat screen monitors for displaying public views of security’s perspective.
- Signage to deter criminal activity by announcing Iverify’s presence.
- Interior and exterior Pan Tilt Zoom cameras to enable the Protection Team to look up and down, left and right, and zoom in for more detail.
- Interior and exterior fixed cameras for surveillance in more confined areas.
- RapidEye MULTI Media 16 input Digital Video Recorders for real-time recording and live viewing of footage.
- Interior/exterior speakers and Eagle microphones to communicate remotely with people inside and outside a location.
- Door and safe contacts to transmit alerts to The “I” when triggered.
- Optex 360 motion detectors for identifying movement within a defined field of view.
- Request-for-assistance handsets and call buttons for remote access to Protection Specialists.
Results
With 1 point of shrink representing between $10,000-15,000 in annual loss, Iverify’s solutions have provided Citi Trends with dramatic shrink reduction and financial benefit.
For example, Iverify began monitoring a Dayton, Ohio, store in December 2007. In January 2008, the store had a shrink rate of 12.75%. Four months later in May, the shrink rate had dropped to 3.85% (an 8.9%. reduction).
Iverify began monitoring a Montogmery, Alabama, store in February 2008. In November 2007, the store had a shrink rate of 15.80%. Four months later in March 2008, the shrink rate had dropped to 8.38% (a 7.42% reduction).
In addition, once Iverify was deployed in some Citi Trends store, many dishonest employees voluntarily quit – further impacting the effectiveness of our shrink solution.
