Issue 2
Traditional views of loss are like posting security at the front door when the back entrance is wide open.
Great for appearances, but your profits are nowhere in sight.
Retailers are eagle-eyed about traditional sources of loss: employee theft, operational errors, that one guy who keeps trying to walk out with power tools in his waistband. Meanwhile, abusive and fraudulent returns are doing more damage to margins than all of them combined.
Without changing how we think about Total Retail Loss (TRL), retailers will keep missing the patterns chipping away at profits.
Our 2026 Total Retail Loss Benchmark Report, built on data from 1,000+ customers and Appriss retail clients, maps out a path forward. One where protecting profits and preserving customer relationships aren’t opposing forces.
You’ll discover:
- Why BORIS returns are creating a $4B cross-channel fraud gap
- How a three-tier “warn and approve” decision protects both margins and customers
- Why tackling $90B in shrink means looking way beyond employee theft
Read on for the key insights, use our Total Retail Loss Calculator to help you do the harder math and download the full report to see where your business fits in.
The Rundown
Your 2026 Total Retail Loss Snapshot
What the data reveals about shrink, returns, and operational loss
Loss prevention has evolved way past counting bottles of shampoo on the shelves. Today, it means pulling returns into the equation, which impacts every part of the organization.
- Operations teams process the volume
- Customer experience teams (and stressed-out store associates) manage the disputes
- Merchandising absorbs the hit to margins
With data coming at us from every direction, we need a new way to track and categorize loss across the business. Which means getting buy-in from every one of those teams.
Yes, shrink is killing retail profits, but returns are doing even more damage.
Returns added up to $706 billion in 2025. That figure has grown as omnichannel shopping expands and return policies have become more… shall we say… generous.
$100B of that is preventable fraud and abuse.
Total shrink sits at $90B across all channels, but the operational damage extends well beyond missing inventory. Employee theft, operational errors and organized retail crime add up to $47B.
We’re drowning in transactional data (but we don’t have to be)
When data doesn’t flow between channels, retailers face a double problem: they can’t identify root causes of shrink and margin leakage, and they can’t see what’s happening in real time. Both organized criminals and opportunistic employees exploit those gaps.
How a TRL approach puts $ back in your P&L
Reducing shrink and returns increases net profits. 80% of shoppers say they’d buy again because they had a positive return experience.
Does that mean turning a blind eye to abuse?
Definitely not.
Most abusers don’t know they’re abusing. They might know their “I only need this TV for the Superbowl, and then I’ll return it” or “I’m going to buy 3 sizes and return the other 2” behaviors exist in a bit of a gray area, but that’s all they know.
So, how do you provide a good return experience AND address behaviors that significantly impact bottom line without alienating your best customers?
Warn and approve
Warn and approve creates a three-tier approach to return decisions. Unlike traditional systems that only approve or deny returns, this adds a critical middle tier: the warning.
The flow:
- Identify high risk patterns
- Warn customer of flag
- Decline if behavior continues
Contrary to popular belief, warn decisions don’t drive customers away. 90% of customers will buy again, post-warning, saving retailers $75B without compromising relationships.
Retailers using warn and approve:
- Protect the experience for rule-abiding customers
- Introduce friction for those engaging in high-risk behaviors
- Reduce losses without sacrificing customer loyalty
To get there, you’ll need unified data and AI
Modern TRL solutions combine two types of AI: Real-time decisioning stops fraud and warns on abuse as it happens at the point of sale. Forensic AI identifies root causes after the fact—surfacing patterns across employees, locations, products, and processes.
But neither works without unified data across all channels. By using AI-enhanced tools across both returns and shrink, retailers are seeing nearly 29% reductions in total loss, saving them upwards of $86B.
Want to know where your business fits in? The full report includes:
- How BORIS returns are creating $4B in cross-channel fraud exposure
- Why your highest-value customers return 8% less than average (and how blanket policies are driving them away)
- The progressive optimization framework retailers can use to implement AI without harming customer relationships
What we're up to
In March, we hit the road for MRC and Shoptalk, talking with retailers about what the data is actually saying about returns and shrink. This year’s Benchmark Report made one thing clear: returns aren’t just a cost of doing business—they’re a strategic lever. Thanks to everyone who stopped by to compare notes and get practical.
We also launched The Takeback Talks, an executive-only forum for VP+ leaders focused on real, peer-to-peer conversations about total loss and what’s actually working. No pitches. No posturing. Just real talk with people solving the same problems you are.
Want to know where we’ll be next? See our upcoming events.
