What happens if you're defeated in an ambush?

The tutorial text describing the Mog Clock says that if you let the timer into the red, you're immediately forced into battle and that if you lose that battle you don't get the retry option. What actually happens in that case?

In most games I would expect you to get kicked back to the title screen, but with autosaving (and being able to save manually almost anywhere) that doesn't seem like much of a punishment here, but it must do something bad or there would be no reason to implement this. I'm afraid to try, personally, without knowing what will happen.

I'm not quite sure I understand it either. I've lost a couple battles with the retry option locked, and instead it just kicks you back to where you were (just like the retry option). I think the only difference is that you essentially lose the battle, losing any items you may have used and that's it. Not a huge deal, so don't worry too much if you fail. :)