What is Total Retail Loss?

Total Retail Loss (TRL) is a concept that adopts a broad ranging and inclusive approach to understanding and categorising all the manageably measurable forms of loss that a retail business might experience across the entire organisation. Based upon years of research, it was coined by the academic Professor Adrian Beck and originally published in a series of research reports published both by the ECR Retail Loss Group and the Retail Industry Leaders Association in the US in 2016. It sets out a clear definition of what is meant by the term ‘retail loss’: Events and outcomes that negatively impact retail profitability and make no positive, identifiable and intrinsic contribution to generating income. It contrasts this with what are regarded as retail costs: Expenditure on activities and investments that are considered to make some form of recognizable contribution to generating current or future retail income. In addition, it identifies a subset of retail costs called ‘margin eroders’, which have often been included by some in their definition of shrink or shrinkage: planned and unplanned activities and behaviours which, strictly speaking, negatively impact upon overall retail profitability, but nevertheless, can be seen as having a beneficial role to play in helping the business generate current and future profits.

It is important to note that TRL is primarily designed to enable the ‘value’ of retail losses to be calculated and not necessarily the number of events – where an associated ‘value’ cannot be calculated or there is no loss of value associated with an incident, this is not included. For instance, if a shoplifter is apprehended leaving a retail store and the goods they were attempting to steal are successfully recovered and can be sold at full value at a later date, there is no financial loss associated with this incident. That is not to say that the retailer may still want to record the fact that an attempted theft took place and was successfully dealt with, but that it would not be recorded in the TRL concept. In this respect TRL is exclusively focused upon recording the value of retail losses and not their prevalence.