THETOTAL

RETAILLOSS

PLAYBOOK

6-StepGuideToCuttingWaste,

CombatingFraud,andDriving

OperationalExcellence.

Introduction

Retaillosspreventionisoften

misunderstood.Manyassumeit’s

onlyaboutstoppingshopliftersordishonestemployees,butthat’sjustonepieceofthepuzzle.Insome

1UnderstandingSTEPTotalRetailLoss

industries,upto80%oflossescomefromnon-fraudsources,such

asdamagedgoods,foodwaste,processbreakdowns,andsupplychaininefficiencies—issuesthatoftengounnoticed.

Totalretaillosspreventiontakesamoreholistic,proactiveapproach.It’saboutrecognizingthatloss

happensacrosstheentire

business—frominternaland

externaltheftandorganizedretailcrime(ORC)toinventoryerrors

andoperationalmissteps.It’snot

justaboutcatchingbadactors;it’sabouttakingresponsibilityforeverypreventableloss.

TheTotalRetailLossPlaybookisyourstep-by-stepguidetoreducing

losses,fightingfraud,andimprovingoperationalefficiency.Thissix-stepframeworkwillhelpyoupinpoint

yourbiggestlossdrivers,build

acollaborativeteam,embrace

technologyandAIsolutions,andempoweryouremployeestoplayanactiveroleinprotectingprofits.

Let,sgetstarted.

2

STEP

IdentifyKeyLossStrategies

3BuildaCollaborativeTotalSTEPLossManagementTeam

4

STEP

Implement

TechnologyandTraining

5ApprissRetail'sRolein

STEPTotalLossManagement

6

STEP

ThePathForward:

BuildaResilient,

AgileFuture

STEP1

UnderstandingTotalRetailLoss

Historically,losspreventionbeganasanextensionofstore

securityfocusedmainlyonshoplifting,employeetheft,and

cashloss.Buttoday,retaillosspreventionhasoutgrownthat

narrowfocus.Withdataflowingacrosseverypartofthebusiness,lossisnowbeingtrackedandcategorizedateverylevelfrommanufacturingtodistribution,outsidesuppliersdowntothe

storesandacrossallareasofcontrollableloss.

Insomeindustries,retaillossescanreachupto80%,driven

byoperationalinefficiencies,foodwaste,inventoryerrors,and

fraudnotjusttheft.Totalretaillosspreventionbroadensthe

focustoallrevenuedrains,givingretailersthevisibilityandtoolstotacklelosseswherevertheyoccur.Tostaycompetitive,retailersmustmovebeyondshrinkandadoptacomprehensive,data-

drivenstrategythataddresseseverysourceoflossimpactingthebottomline.

ProfessorAdrianBeckintroducedtheconceptofTotalRetailLossinhis2016RILA-sponsoredpaper,

BeyondShrinkage,Introducing

TotalRetailLoss

.Hisresearchidentified33typesofloss(expandedto42in2018),spanningtheentireretailecosystemfromin-storethefttosupplychainerrors,corporatefraud,andecommerce

abuse.Beckskeyfinding:toeffectivelymanageloss,retailersmusttakeaholisticviewoftheiroperationsandmaketargetedinvestmentsthataddresseverysourceofrisk,ultimately

protectingprofitability.

Fortotalretaillosspreventiontosucceed,itneedsfullsupport

Tostaycompetitive,

retailersmustmove

beyondshrinkand

adoptacomprehensive,data-drivenstrategy

thataddressesevery

sourceoflossimpactingthebottomline.

acrosstheorganizationfromthec-suitetostoreteams.Usingarootcauseanalysisapproach(assess,decide,act),retailerscancontinuouslyuncoverandaddressissuesattheirsource.

Onceembraced,thisapproachrevealshiddenlossdriversandhelpsretailersapplytherightpeople,processes,ortechnologytopreventfuturewaste.Donewell,totalretaillossstrengthenssafety,protectsproducts,andensuressmootherinventoryflowespeciallyasecommercecontinuestogrow.

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STEP2

IdentifyKeyLossStrategies

Thefirststeptouncoveringhiddenlossesandmitigatingfraudisathorough,end-to-endreviewofallyourlosssources.Startby

evaluatingtraditionalareasinternalandexternaltheftalongwiththesystemsandprocessesdesignedtopreventthem.

Alignmentacrossleadershipondefinitionsandterminologyiscriticaltofullyunderstandtotalretaillossandimplementaneffectivepreventionstrategy.

TheLossPreventionteammustclearlydefineshrink,cashloss,

theft,fraud,andwasteestablishingtheseasthecoremetrics

forsuccess.Thisclarityhelpsdistinguishwhatcanbemeasured,managed,andultimatelyreduced.Fortunately,retailersalready

havevaluabledataacrosstheiroperationstohelptargetchangesandtrackprogress.

Onceyouveestablishedcleardefinitionsandabaseline,thenextstepisexpandingthefocustooverlookedlosscategorieswhichcanaccountforasignificantportionoftotallossesincluding:

TheLossPrevention

teammustclearly

defineshrink,cash

loss,theft,fraud,andwaste—establishingtheseasthecore

metricsforsuccess.

1.DamagedorOut-of-SeasonItems:Thisincludesunsellableproductsduetodamageorseasonality.Properaccountingfortheseitemsiscrucial,astheydirectlyimpactshrink.Effectiveplanning,allocation,andstrategiesformanagingexcess

inventoryareessentialtominimizinglosses.

2.DistributionCenter(DC)andInbound/OutboundAudits:

Errorsindistributioncenterssuchasmispicksandtransferpaperworkerrorscanleadtoinventorydiscrepancies

andlosses.Thesemistakeswastetimeandlaborwhilealsoimpactingproductavailabilityinstores,whichcanhurtsalesandcustomersatisfaction.Data-driveninventoryaudits

areessentialformaintainingaccuracy,resolvinginvoicediscrepancies,andpreventinglossesduringtransit.

3.CouponsandPriceOverrides:Abuseofpromotionalorlong-standingdiscounts,promocodes,andimpropercouponusagecansignificantlyimpactmargins.

4.LoyaltyProgramAbuse:Under-managedloyaltyprogramscanbegamedtopurchasemerchandisebysomebodynotentitledtouseit,allowingforcustomermistrustandlostrevenue.

5.FoodWaste:Shelflifeandexpirationofproductsarecrucialforconveniencestores,restaurants,grocerystores,andgeneralmerchandisersthatsellready-to-eatproducts.Duetothe

complexnatureofready-to-eatproducts,wastecangounnoticedchain-wideifleftunchecked.

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Returnsarean

increasingchallenge

contributingtoinventoryshrink.Issuesrange

fromwardrobing—wherecustomersreturnworn

orout-of-seasonitems—tofrequentreturners

whoerodemarginsanddriveupshrink.

6.Supplies:Oftenoverlooked,suppliesareacontrollablesourceofloss.Withrisingmaterialcosts,managingsupplyusage

effectivelycansignificantlyimpactoverallprofitability.

7.PerishableGoods:Thisisakeydatapointforconvenience

retailers,groceryoperators,andrestaurants.Perishablegoodsrequirecarefulmanagementtoreducespoilage,waste,

andnon-traditionalanti-theftprotocols,whichcanleadtosignificantfinanciallosses.

8.MissedRecallsandReturnstoVendorforCredit:Missed

recallsorfailuretoreturnunsellableitemstovendorsforcreditcanresultinlossesandleaveretailersopentopotentialcivil

liabilityissuesiftherecalledproductissold.

9.Returns:Returnsareanincreasingchallengecontributing

toinventoryshrink.Issuesrangefromwardrobing—where

customersreturnwornorout-of-seasonitems—tofrequentreturnerswhoerodemarginsanddriveupshrink.Additionally,fraudstersexploitreturnpoliciesbybringingbackstolen

merchandiseorengagingintenderlaundering,convertingstorecreditintocashorotherformsofpayment.

10.FuelLosses:Fuellossisacriticalconcernforconvenience

storeoperatorsandgrocerssellingfuel.Whilesomelosses

occurfrombypassingthepumpwithtechniqueslike

"jumping,"themajoritystemfrompricingdiscrepancies

ratherthantheft.Failingtoupdatefuelpricesinreal-timeormisapplyingdiscountscanleadtosignificantmarginerosion.

11.MismatchedFootwearandApparel:Returnsandinventoryerrorscanleadtomismatchedorincompletepairsof

shoesandclothingsets,renderingthemunsellableandincreasingshrink.

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STEP3

BuildaCollaborativeTotalLossManagementTeam

Collaborationisessentialforthesuccessofanylarge-scaleretail

initiative—andtotalretaillosspreventionisnoexception.Many

initiativesfallshortbecauseofconflictingdepartmentalpriorities,

unclearmessaging,andalackofalignmentongoals.Adedicated,cross-functionalTotalRetailLossManagementTeambringstogetherleadersfromacrosstheorganizationtobreakdownsilos,alignon

strategy,andchampiontheprogramateverylevel.

TheidealTotalRetailLossManagementTeamincludesexperts

whoseetheentire"bigpicture"ofcorporategoalsandthosewho

understandwherethedatalives.Nothingslowsdownalarge

corporaterolloutlikeC-Suiteleadershipplayingagameoftelephoneregardinghowvariousdepartmentalmetricsaretrackedornot

tracked;ateamof"Generals"and"tacticalexperts"willhelpdeliveraquickerandmoreprofoundimpact.

TheTotalRetailLossManagementTeamshouldharnesstheinsightfromthefollowingdepartments:

LossPrevention/AssetProtection:Thecoreteamdedicatedto

reducingpreventablelossisresponsiblefortacklingin-storeandecommercetheft,fraud,organizedretailcrime(ORC),andsecurityrisks.TheyalreadyusetoolslikeEBR,CCTV,intrusionalarms,

andEAS.Byincorporatingcontrollablelosspreventionintotheirstrategy,theyprovidevaluableinsightstothecross-functionalteam,helpingtoexpandmarginsandreduceshrink.

TheidealTotalRetail

LossManagement

Teamincludesexpertswhoseetheentire"bigpicture"ofcorporate

goalsandthosewhounderstandwherethedatalives.

Operations:Employeeswithknowledgeofday-to-dayprocesses,suchasinventorymanagement,supplychainmanagement,andstoreoperations,utilizetoolssuchasinventorymanagement,RFID,ERP,andoperationalreports.Thisteamwillhavedirectinsightintocurrentandpotentialdriversofphysicalwastewithinyourstores.

Finance/Accounting:Teamsthatmanagemargins,identify

inefficiencies,andunderstandthefinancialimpactofvariouslosscategoriesonshrinkandmargins.Thisteamcanhelpmakethe

businesscaseforfurtherinvestmentintototalretaillosspreventionsolutions.

IT:Technicalexpertswhocansupporttotalretaillossinitiativesbyprovidingaccesstomultipleoperationalsystems.Thisallowsthemtomakedata-drivendecisionsandcontinuetotrack

successatoperationalhingepointswhereaninitiativeoverlapsdepartmentally.

HumanResources:Thisteamisyourlifelinetotraining,

communication,andinsightintoexistingemployeebehavior,

safetyprotocols,andemployeealertlinesbefore,during,andaftertherolloutofyourtotalretaillossprogram.

ProductBuyers/Merchandising:Expertsinmerchandising

strategiesformitigatingloss,merchandiseprotectionstandards,andwasteduetoproductoverstock,spoilage,ormismanagedpricingstrategies.

Onceassembled,thisteamshouldmeetregularlytodeveloptherulesoftheroadregardingbenchmarkingsuccess,employee

training,andsuccessfulrollout.Determinewhichstakeholder(s)willbeaccountablefordeliveringmeasurablebenefitsofthenewtotalretaillossapproachandwhatresourcesarenecessarytosupportrelatedorganizationalgoals.

STEP4

ImplementTechnologyandTraining

Nomajorchangecomeswithoutacost—andleadersoften

overestimatethebenefitswhileunderestimatingtheeffortrequired.Shiftingtoatotalretaillossmindsetdemandstime,labor,anda

fundamentalchangeinperspectiveacrosstheorganization.Somemembersmaystruggletomovefromtheirtraditional"lanes"to

adoptingabroaderstrategyforimprovingrevenueandoperationalhealth.Clarityonvisionandgoalsiskeytokeepingeveryone

motivatedandaligned.

That’swhythetechnologyandtrainingbehindatotalretail

lossstrategymustbebothpracticalandtransformative.When

employeesseethesetoolsasenablers—notobstacles—they’re

morelikelytoembracethechangesasbeneficialtothebusiness,notjustdisruptions.

Toeasethetransition,therighttechnologyandtrainingmust

bedeployedbefore,during,andaftertherollout.Thisensures

organization-widebuy-in,ongoingadherence,andmeasurablesatisfactionwiththenewprocesses.

Shiftingtoatotalretaillossmindsetdemandstime,labor,anda

fundamentalchangeinperspectiveacrosstheorganization.

LEVERAGETECHNOLOGYFORPRECISIONANDEFFICIENCY:

PinpointLossDrivers:Advancedtoolslikeexception-based

reporting(EBR)areessentialforanalyzingtransactionsand

inventoryissues,detectinganomalies,andidentifyingspecifictimes,employees,orpatternsthatrequireinvestigation.

ModernEBRapplicationsintegratetransactionaldata,inventoryrecords,andotherkeydatapointstoprovideacomprehensive,360-degreeviewofthebusiness,uncoveringpreviouslyhiddenopportunities.WithAI-driveninsights,userscanautomaticallypinpointrisksandfocusonaddressingtherootcausesofloss.

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AI-poweredsolutionsallowforgut-checkingbiaswithindecisions

andcandeliver

automationtodrive

transformativeimpact.

TailorSolutionstoBusinessNeeds:Deploytechnology

customizedforoperationalprioritiesacrosssectorslikefood,fuel,grocery,andretail.Totalretaillossexamplesincludetracking

age-restricteditemsandSKU-levelwaste,managingfuelpricingaccuracy,andaddressingissueslikedamageandreturnto

vendorprocesses.

StreamlineOperations:Automateprocessestoreducemanualefforts,suchasreplacingmassivenonconjoinedreportssent

throughemailwithlittleinterpretationinsteadofsimple,quick,

actionable/coachablealertssentdirectlytotheemployee.

Implementsolutionsthatcantalktoeachotherandprovidea

singlepointofcontactforresolvingbusinessissues.Examples

includeEBR,CaseManagement,ReturnAuthorization,Itemnot

Receivedclaims,Video,andInventorysystems,allconnectedforclosed-loopanalysis.AI-drivenreturnauthorizationenhances

decision-makingbyworkingquietlyinthebackgroundtoidentifyandflagpotentiallyfraudulentreturnsandclaimsinrealtime,

allowingstafftofocusonhigher-valuetasks.

ENHANCEEMPLOYEETRAININGANDPROCESSES

StartwithVisionandClarity(NorthStar):Successbeginswithseniorexecutivesaligningonaclearvisiontoreducetotalloss

andimproveprofitability.Setcleargoalsandobjectives,then

communicatethemacrosstheorganization.Embedthisvision

intodailyoperationstofosteracultureoftotallossprevention.

Continuouslymeasureprogress,adaptasneeded,andmaintaintransparency—nomattertheresults.

EmpowerTeamswithActionableTools:Whetheraplanned

initiativeoranupdatetotheexistingpowerhierarchywithin

yourbusiness,employeesneedtobearmedwithAIsolutionstoaddressinefficiencies,reinforcebestpractices,andproactivelyimprovedailyoperations.AI-poweredsolutionsallowforgut-

checkingbiaswithindecisionsandcandeliverautomationtodrivetransformativeimpact.

DevelopTargetedTraining:Useinsightsfromdataanalysisto

coachonhowtotalretaillosscanbeimpactedbyallemployeeswithintheirspecificsliceofthebusiness.Crafttrainingprogramslaser-focusedonspecificlossdrivers,suchascouponmisuseorprocessinefficiencies.

StandardizeandRaiseAwareness:Refineworkflowsand

protocolstoimproveproductivityandproactivelyintegrateawarenesscampaignstoaddressshrinkageandloss.This

isn'taboutblastingemailsand"CC'ingALL;"it'saboutcraftingmessages,processes,andalertsthatreinforcetheimpactofreducingloss.

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STEP5

ApprissRetail'sRoleinTotalLossManagement

AsPresidentHarryS.Trumanoncesaid,"Youcanalwaysamendabigplan,butyoucanneverexpandalittleone."Todrivemeaningfulchangeintotalretaillossprevention,astrategymustbeexpansiveandequippedwiththerighttoolstotackletheunexpected.

ApprissRetailoffersacomprehensivesuiteofsolutionsdesignedtoaddressthefullrangeofretaillosses—fromshrinkage,theft,and

returnsfraudtooperationalinefficienciesandwaste.Bycombiningadvanceddataanalytics,real-timefraudprevention,operationalautomation,andemployeetraining,ApprissRetailempowers

retailerstoproactivelymanageandreduceTotalRetailLoss.

ApprissRetail’stotalretaillosspreventionsolutionisbuiltaroundsevencriticalcapabilitiesthatdelivervalueforretailers:

1.ComprehensiveDataAnalytics:AnalyzestransactionandPOSdatatoidentifytransactionanomalies(e.g.,voids,priceoverrides,couponabuse,fraudulentreturns,andinventoryerrors)and

pinpointrootcausesoflosses.

Bycombining

advanceddata

analytics,real-time

fraudprevention,

operationalautomation,andemployeetraining,ApprissRetailempowersretailerstoproactively

manageandreduceTotalRetailLoss.

2.Shrinkage&FraudDetection:Detectpatternsofshrinkage(e.g.,shoplifting,employeetheft,vendorfraud)withdetailedreportingforsuspiciousactivitiesandtoolstomonitoralertsforsuspiciousactivities,andtoolstomonitoremployeebehavior.

3.OperationalEfficiency:Integrateallnecessarydataand

toolsintoasingleplatformtostreamlinerootcauseanalysisandaddressinventorymanagement,pricing,andoperationsinefficiencies.

4.ReturnsandClaimsFraudPrevention:Stopfraudulentreturns

andclaimsactivityasithappensinreal-timethroughintegrationstoPOSorecommercesystemstoprotectyourloyalcustomersandminimizetheimpactfraudstersplaceonyourbottomline.

5.EmployeeTraining&Coaching:Tailoredrecommendationsanddatadriventrainingtoaddressinefficienciesandimproveemployeeperformance.

6.Customizable&ScalableSolutions:Adaptstouniqueretailerneedssuchasage-restrictedproducts,SKUwastetracking,andcompliancewithregulatoryrequirements.

7.Collaboration&Compliance:Empowerlosspreventionteamswithactionableinsightsanddocumentedaudittrailstoensureregulatoryrequirementsaremet.

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RETAIL

Totalretaillosspreventionisnota"setitandforget

STEP6

it"strategy;itrequires

curationandcontinuousmanagement.

ThePathForward:BuildaResilient,AgileFuture

Adaptingtoandgrowingwiththeever-changinglandscapeoftotalretaillosstakes

determinationandacultureofoperationalresilience.Thebottomlineisthatbeforeinvestinginanyshifttototalretaillossprevention,retailersshouldassesstheirneedsandstartwithscalableoptionstogrowalongsidetheiroverarchingbusinessgoals.Totalretaillosspreventionisnota

"setitandforgetit"strategy;itrequirescurationandcontinuousmanagement.

Postimplementationofanetwork-wideshifttototalretailloss,it'scriticaltofocusonthefollowingprocesses:

EmbraceContinuousImprovement:Reviewlosspreventionstrategiesandoperationalworkflowsregularlytoidentifynewchallenges,optimizeprocesses,andaddress

evolvingthreats.

LeverageEmergingTechnologies:InvestinAI,machinelearning,andreal-timeanalyticsto

avoidfraud,wast