Back in June, we looked at Professor Adrian Beck’s 2016 report of Total Retail Loss and what it means in terms of understanding current and future retail risks and how to respond to them effectively. Now, Beck has launched an update to his original concept: Total Retail Loss 2.0. This is an expansion of the original report, as well as looking at the impact Total Retail Loss has had on the industry since its conception. Gary Trotter analyses the detail.
Total Retail Loss 2.0 reflects the changes in the retail environment since 2016. It continues to improve understanding around the various types of loss the retail industry faces, including supply chain, store, corporate and e-Commerce.
In TRL 2.0, e-Commerce has expanded the number of areas of loss from 33 to 42, developing a more consistent and holistic picture of loss in this area. This category remains a challenging and evolving component of retail loss and the new areas of e-Commerce loss include theft in transit, stolen credit card frauds, fraudulent delivery claims, counterfeit returns, promotion/sale scams, internal theft, collusion frauds, delivery error claims (non-malicious) and damaged returns (non-malicious).
As part of Beck’s research for TRL 2.0, retailers were surveyed about their awareness and attitudes towards Total Retail Loss. Professor Beck’s research uncovered that few, if any, retailers have yet to fully implement the Total Retail Loss concept. Of those that had done so, the research found that retailers were more likely to use a bespoke approach by evaluating their current capabilities, resource availability, priorities, organisational culture and attitude towards change.
Approximately nine in every ten retailers surveyed in Beck’s study were aware of the Total Retail Loss concept. Almost two-thirds of those retailers aware of it implied that it was having an impact on how their organisation responded to retail loss.
Of those retailers aware of Total Retail Loss, over 50% responded that they had either fully embraced the concept or had adopted some of it. For those retailers yet to adopt it, nearly 50% responded that they were likely to adopt it at some point in the next year. These findings around adoption suggest that the concept of Total Retail Loss is really gaining traction in the industry.
The study asked retailers their thoughts around the existing Total Retail Loss typology and the existing 33 areas of retail loss. After gathering detailed feedback from retailers, the research found that Total Retail Loss is a good representation of the main areas of loss the retail industry faces.
Implementing TRL 2.0
A common area of concern among retailers involved in Beck’s study was the lack of guidance on how they might implement Total Retail Loss. Through research, 12 factors to consider when looking to implement this model have been identified:
*Make sure the C-Suite is on board
*Develop a business case that focuses on any financial benefits
*Adopt an incrementalistic approach towards TRL
*Identify quick wins first
*Organise for using TRL
*Advocate for TRL: act as agents of change
*Review reporting structures for TRL
*Prepare for organisational antagonism
*Think about the ‘right’ name for your TRL
*Avoid terminological confusion
*Use TRL as an analytical lens
*Remember timing is key
Total Retail Loss seeks to provide a coherent approach towards measuring loss for the retail industry. It’s a progressive approach that, if implemented effectively, will enable the protection of company profits.
As we’ve seen, over three years there has been a significant change between the original Total Retail Loss model and the 2.0 version, demonstrating that the industry changes rapidly. Therefore, as a retailer, it’s smart to stay aware of the constant changes in losses the retail industry face through technology advancements, increases in data and awareness of risk.
Gary Trotter is Co-Founder of Ocucon