How Do You Manage Risk In Retail?

The trend for online shopping has been increased, with more consumers turning to online platforms than ever before. Traditional brick-and-mortar retailers were increasingly investing in their e-commerce capabilities to remain competitive.

Traditional brick-and-mortar retailers are facing challenges such as high street decline, rising rents, and competition from online and discount retailers. Many were forced to rethink their business models, optimise their store portfolios, and enhance their digital capabilities to stay afloat in a rapidly evolving market.

Retailers are also increasingly adopting advanced technologies such as artificial intelligence, augmented reality, and virtual reality to enhance the shopping experience. These can be used to streamline operations, and gain insights into consumer behaviour. This included innovations like cashierless checkout systems, personalised recommendations, and immersive shopping experiences.

In terms of changes in consumer preferences, there’s a greater emphasis on health and wellness. Many retailers are putting an increased emphasis on health-related products, home delivery services, and experiential retail concepts.

There is also growing awareness among consumers about the environmental and social impact of their purchasing decisions. Retailers were responding by introducing sustainable and ethically sourced products, reducing packaging waste, and implementing eco-friendly practices in their operations.

The wet weather this spring has been attributed to a fall in sales on the high street. We witnessed the fifth month of negative sales in February. However, the good news is that retail sales appeared to stabilise in March, so there should be brighter months ahead.

Other risks include those to any aspects of your operations.

This can include supply chain disruptions or inventory management issues. Meanwhile, financial risks can include cash flow problems or issues with credit. .

Elsewhere, there’s regulatory risks like compliance with labour laws or data protection regulations; and reputational risks like negative publicity or customer dissatisfaction.

How are these risks assessed?

New World Norm use a variety of methods to identify any potential risks that could impact your business.

Once we’ve identified potential risks, assess the likelihood and impact of each risk on your business. We consider factors such as:

• the probability of it occurring
• the severity of the impact if it does
• the speed at which the risk could arise. 

We even go as far as evaluating if the risk is acceptable and within tolerance, as often there is a desire to fix all risks, but with the New World Norm expert input, we can guide you on acceptable risk so you deploy focus on the best ROI.

This will help you to prioritise risks and focus resources on managing the most significant ones.

New World Norm works with you to develop risk management strategies.

These strategies may include risk avoidance: eschewing any activities that pose notable risks to your business. We also introduce measures that can reduce the likelihood of or severity of risks. For instance, nowadays many retail businesses invest in the latest technologies to enhance their security, or they diversify suppliers to reduce problems with their supply chain.

The right technology and security is particularly key in today’s landscape. Invest in technology and security measures to protect against cyber threats, fraud, and other security risks that can impact your retail operations and customer trust.

Building strong relationships with suppliers, partners, and stakeholders is also crucial. This can enhance collaboration and resilience in the face of risks.

Another strategy is what’s known as ‘risk transfer’, which refers to transferring risks to third parties, whether through insurance, contracts or another arrangement. In some cases, businesses have to accept certain risks when the cost of protecting yourself outweighs the potential impact. 

We can implement internal controls and procedures to monitor risks more effectively. 

This may involve establishing clear policies and protocols, conducting regular risk assessments, and ensuring that employees are trained to recognize and respond to potential risks.

We continuously monitor the retail environment and regularly review your risk management strategies to ensure they remain effective and relevant. Stay informed about emerging risks and adapt your approach accordingly.

We help you stay compliant with relevant laws, regulations, and industry standards to mitigate legal and regulatory risks.

With our proactive approach to risk management, retail businesses will find it easier to navigate uncertainties and protect their interests in a dynamic and competitive market environment.

If you’re wondering how to manage risk in the retail sector, don’t hesitate to contact our team for more information.