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Posted Date: 3/13/2012

The Secret of Love Culture's Success

No one looking for an auspicious time to start a retail clothing business would pick the eve of the most severe recession in 70 years — a recession that would spell the end of many well-known retail brands. But when Jai Rhee and Bennet Koo, former executives of Forever 21, founded Love Culture in 2007, they envisioned a retail chain that would celebrate the joyful, independent and adventurous spirit of young women. That spirit, embodied in the brand's name, has stood up well to the ravages of the economy.

Love Culture sells fashion-forward, affordable clothing, footwear and accessories targeted to a 15-to-35-year-old female demographic, though actual shoppers may be anywhere from their early teens into their fifties. Its stores, typically mall-based, sport a distinctive design. Bright, uncluttered and decorated with pink tiled floors, white walls and red fixtures and chandeliers, Love Culture stores show off their wares to advantage. The stores' "warm and inviting" interiors make customers feel "buoyed," according to CFO Brenda Morris.

The company doesn't design its merchandise, but searches the world over for styles that "we think girls are going to love," according to Morris. Though it keeps a few basic t-shirts and cardigans in stock, Love Culture specializes in up-to-the-nanosecond items, catering to shoppers who want to be trend-setters. This combination of low prices and trendy looks allows young women to dress in a hip, self-expressive way on a small budget. For example, a customer may invest in a pair of slacks from a name designer and then match the slacks with $15 sequined tops from Love Culture. Even if a $15 top has a life expectancy of only a couple of years, Morris points out that its fashion lifetime is even briefer. Constructing these garments to last for decades would be overkill.

With its keen understanding of customer tastes, Love Culture soon developed a devoted following and has grown rapidly. Currently it has about 60 stores in 26 states as well as an e-commerce site. The web store, which was launched only a year and a half ago, accounts for less than 5 percent of sales, but fills an important role for customers who don't live within convenient driving distance of a store.

Though e-commerce remains a major opportunity, Love Culture is primarily focused today on expanding its bricks-and-mortar stores. The company is opening new stores at the rate of 25 to 30 per year and hopes to have 100 new stores open in the next three years. Most new stores will be located in areas where the company already has a presence. Building up a critical mass in regions where it already has a following will help the company build brand awareness, provide career ladders for employees and support the infrastructure for store operations and management.

Managing growth
Though headlong growth is a sign of success — and a path to even greater success — it poses challenges of its own, as many companies have learned the hard way. Love Culture is well aware of these challenges and is addressing them, as Morris says, by "staying disciplined, making sure we don't get ahead of ourselves, executing on the right deals and not adding too many new categories or stores."

A prerequisite for orderly growth is systems and processes that scale easily; putting such systems and processes into place has been Morris's focus since she arrived at the company last year. A major initiative — given the number of real estate transactions Love Culture is entering into — is implementing a lease management system. The company's adoption of the Visual Lease Software as a Service solution is expected to build a robust lease database at a manageable cost.

However, the largest systems effort involves the replacement of the company's home-grown retail IT systems, which, though they have served well until now, were not designed to handle the coming growth wave. To replace these systems with a solution that would handle the next developmental phase, Love Culture undertook a comprehensive needs analysis, evaluating what was working well, what could be improved, and what was needed to grow the organization. It came up with a list of hundreds of items.

After issuing an RFP, the company chose a short list of a few vendors that could support most of the wish-list items and that had successful experiences with relevant retailer customers already under their belts. Demos, reference checks and discussions about implementation timelines winnowed the field down to one — Epicor's Retail Software as a Service solution, which includes store, merchandising, CRM, and audit and operations management modules.

In addition to meeting 95 percent of Love Culture's functional requirements out of the box, Epicor offered several other pluses: It had successfully implemented its solution with many other apparel retailers, such as Boot Barn, Kellwood Company and Windsor Fashions; it promised a four-month project implementation timeline; and perhaps most important, it hosted the solution itself — which would relieve Love Culture of the burden of operating and maintaining the software and allow it to focus its IT resources elsewhere.

Optimizing, not customizing
The project kickoff took place at the end of February, and Morris plans for all stores to go live by July 1. The financial application is being fast-tracked and will be followed in short order by allocation, planning, CRM, sales audits, store systems and reporting. "We're still working through the conversion plan, trying to decide how much data to bring in," Morris explains.

Among other benefits, the Epicor system will allow Love Culture to manage its store inventory levels more effectively and execute the right pricing strategy in each location. Rich analytical tools will enable the company to make and execute a variety of business decisions quickly.

Because the Epicor software came so close to meeting all its requirements, the company made the decision not to customize it. Instead, Love Culture will run the solution out of the box for six months, with substantial help and training from Epicor. At the end of the six-month period, it will bring the Epicor team back to review and optimize its use of the software. Morris explains, "Our goal would be to use the existing systems as much as possible to get to the right decisions day in and day out. Epicor has a long list of customers with best practices — and, of course, our team here has many years of retail experience, too — so we don't have to recreate the wheel."

Masha Zager is a New York-based Apparel contributing writer specializing in business and technology.

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