Total retail loss recognizes that loss happens across the entire retail business — from internal and external theft and organized retail crime (ORC), to inventory errors and operational missteps. Total retail loss prevention is about understanding the inconsistencies and quirks that are inherent to operating within organizational silos where simplified nomenclature is often used to define complex problems. Total retail loss is not a “loss prevention issue.” It’s a framework that allows retail organizations to better understand the range and nuances of loss across their business, allowing for organizational-wide change to reduce revenue loss.

What is total retail loss?

Total retail loss is a concept that involves calculating all points of loss within a retail enterprise. When analyzing “loss,” total retail loss goes beyond just calculating shrink because actual retail losses in some industries can reach up to 80%, driven by operational inefficiencies, food waste, fuel mismanagement, inventory errors, and fraud—not just theft. Total retail loss prevention broadens the focus to managing all revenue drains, giving retailers the visibility and tools to tackle losses wherever they occur.

Professor Adrian Beck introduced the concept of Total Retail Loss in his 2016 RILA-sponsored paper, Beyond Shrinkage: Introducing Total Retail Loss. His research identified 30+ types of loss spanning the entire retail ecosystem—from in-store theft to supply chain errors, corporate fraud, and ecommerce abuse. Beck’s key finding is that to manage loss effectively, retailers must take a holistic view of their operations and make targeted investments that address every source of risk, ultimately protecting profitability.

A retailer’s ability to fully comprehend their total retail loss metrics allows for a broader and more complete view of revenue loss across their entire business. By knowing where dollars are wasted, retailers can advocate for more resources to shore up these points of inefficiency. Much like an NFL franchise addressing its offensive and defensive weaknesses through the draft, total retail loss looks to align efficiency to points of waste when applied using a total retail loss prevention solution. Finding corporate inefficiencies leads to a stronger bottom-line and streamlined operations.

The difference between retail shrinkage and total retail loss

Inventory shrink costs retailers millions of dollars annually—in 2023 alone, shrink accounted for $142 billion in losses. Many total retail loss examples have historically been categorized as simply “shrink,” or the loss of revenue due to employee theft, shoplifting, administrative errors, or vendor fraud, but total retail loss is a much broader view of a retailer’s overall operations.

To draw a line of distinction using a metaphor, traditionally, shrink is equated to “catching bad guys” who are stealing from or scamming a retail operation. In contrast, total retail loss would be the equivalent of taking down an entire criminal empire.

Shrink is tackling the symptoms, whereas total retail loss prevention focuses on addressing the root cause.

By shifting a retailer’s loss prevention strategy toward total retail loss, a broader, holistic view of where loss is happening, retailers can close gaps due to food waste, operational ineffectiveness, poorly trained staff, supplier fraud and markdowns, and more.

Total retail loss examples encompass a large swath of loss across a retailer’s internal and external operations. Still, before these additional sources of loss can be determined, a retailer’s Loss Prevention team must clearly define shrink, cash loss, theft, fraud, and waste — establishing these as the core metrics for success. Once established, the next step is expanding the focus to overlooked loss categories — total retail loss examples include damaged or out-of-season items, distribution center (DC) and inbound/outbound audits, food waste, and more.

Overlooked categories of total retail loss

Expanding the focus on these overlooked sources within total retail loss includes various factors. Below is an excerpt that provides more details to assist you when developing a total retail loss game plan:

• Product recalls, or unsellable items, from vendors that were not properly returned or credited
• The accidental damage of products during stocking
• Abuse of coupons and discounts
• Mismanaging fuel with pricing errors, outdated signage, or operational issues
• Wasting freshly prepared food items that a store produces – especially in a c-store setting
• Spoiling perishable goods like dairy and fruit from consumer-packaged goods partners

The new Total Retail Loss Playbook: A 6-Step Guide to Cutting Waste, Combating Fraud & Driving Operational Excellence provides a more extended outline (and complete list) of the crucial categories that must be included in a total retail loss prevention strategy.

Every department plays a role in total retail loss

Collaboration is essential for the success of any large-scale retail initiative — and total retail loss prevention is no exception. Total retail loss must be stewarded by a dedicated, cross-functional Total Retail Loss Management Team that brings together leaders from across the organization (such as figureheads representing Store, Supply Chain, Ecommerce, and Corporate) to break down silos, align on strategy, and champion the program at every level.

The ethos of any total retail loss program should be akin to “starting small and building gradually.” Employees from the store level to corporate cannot embrace total retail loss prevention solutions overnight; it is a methodical step-by-step process, so employees don’t feel like more is being added to their plate or their role is being made less meaningful due to overlapping priorities now shared across the business.

Employees need to be introduced to total retail loss as an analytical concept and not a measure to gut their ranks for efficiency. Leadership needs to preemptively develop communication plans to explain, reassure, and support the rollout of a total retail loss mindset shift.

Educating on the importance and impact of total retail loss needs to be a constant drumbeat.

Embed this vision into daily operations to foster a culture of total loss prevention. Continuously measure progress, provide relevant examples when communicating with staff, and maintain transparency—no matter the results. 

Measurable results through a total retail loss strategy

Appriss Retail offers a comprehensive suite of total retail loss prevention solutions designed to address the full range of retail losses — from shrinkage, theft, and return fraud, to operational inefficiencies and waste. By combining advanced data analytics, real-time fraud prevention, operational automation, and employee training, Appriss Retail empowers retailers to manage and reduce total retail loss proactively.

To learn more about total retail loss and how your retail empire can leverage a total loss prevention strategy to improve revenue, read The Total Retail Loss Playbook: A 6-Step Guide to Cutting Waste, Combating Fraud & Driving Operational Excellence a guide to addressing the up to 80% of losses in some industries that stem from operational inefficiencies, waste, fraud, and missed opportunities.