Why Is Risk Management Important To The Retail Industry?

It’s no secret that the retail sector has come under significant pressure over the past few years. Brick and mortar stores in particular have found it harder to survive in the past. Only this week, we heard that a highstreet favourite The Body Shop is set to go into administration.

We live in unpredictable times, and with the UK recently going into recession, more retail businesses are looking to better prepare for any storms that come their way. 

Risk management is more vital to the retail industry than ever before, whether you run a physical or e-commerce business. Here’s why:

Firstly, it can provide your business with more financial stability.

Most retail businesses face various financial risks, from market fluctuations and economic downturns to changes in consumer behaviour. For instance, spending this Christmas was much lower than average due to the cost of living crisis. The fact that the UK has been reported to have gone into recession might also impact spending habits in the months ahead. The cost of living crisis is continuing to make people tighten their belts. 

Effective risk management helps mitigate these risks and ensures the financial stability of the business. Although we can’t change what happens, we can always be better prepared for any contingency.

Risk management involves identifying any weaknesses in your supply chain.

If you work in the retail industry, you’re likely to rely on often complex supply chains. Perhaps you work with multiple suppliers and partners, where even the smallest disruptions can have a big impact. 

Problems which affect a supply chain can include natural disasters, political instability, or transportation issues that arise for any number of reasons.  All of these can significantly impact your retail operations. 

Our expert team at New World Norm delivers risk management that helps identify and address any potential supply chain vulnerabilities. We use the latest and best technology to help you improve operations at every level of your supply chain. 

Protect the reputation of your retail business and broaden your appeal.

More than ever, retail businesses depend on their reputation to attract customers. It’s never been easier for consumers to let everyone know if they’re not happy with a product or service. Online reviews can have a massive impact on your business, leading to you having to work harder than ever to recover your reputation. 

Whether customers are affected by a data breach, faulty product or unethical practices, it all makes a big difference and can erode consumer trust. New World Norm can introduce effective risk management strategies to help identify and mitigate risks to protect the brand’s reputation.

Meet the latest regulatory compliance with greater ease. 

Like most industries, the retail sector is subject to various regulations. In this industry, they’re mainly related to consumer protection, product safety, employee practices and data privacy. Non-compliance with these regulations can lead to significant fines and legal penalties. In these challenging financial times, that’s the last thing any business needs.

Breaching regulations can also cause damage to your reputation and it can take a long time to recover from.

Our experts in risk management ensure that retailers fully understand and adhere to relevant regulations. This will reduce the likelihood of compliance-related issues.

Risk management is also more vital to the retail sector due to cybercrime. 

Thanks to the increasing digitisation of retail operations, cybersecurity threats such as data breaches, ransomware attacks, and phishing scams pose significant risks to retailers. Implementing robust cybersecurity measures and protocols as part of risk management practices helps safeguard sensitive customer data and prevent financial losses.

Our risk management practices can help retailers identify inefficiencies and vulnerabilities in their operations. By addressing these issues, retailers can improve operational efficiency, reduce costs, and enhance overall performance.

Contingency planning is a vital part of risk management. 

From the wars in Israel and Ukraine, to the upcoming US and UK elections, there’s no shortage of global events that can affect international businesses this year. We all recently found the degree to which unprecedented events can impact our business after the Covid pandemic. 

Indeed, along with the hospitality sector, the Covid pandemic perhaps had a bigger impact on retail stores than any other industry. 

Risk management involves developing contingency plans and business continuity strategies to ensure that retailers can respond effectively to emergencies and minimise the impact on their business.

Partner with New World Norm and put your retail business in safe hands. 

New World Norm loves working with retail businesses to safeguard their financial assets, protect their reputation and ensure regulatory compliance. We can also enhance your cybersecurity, improve your operations, and help you prepare for any emergency that comes your way. 

We will proactively identify and address risks, so your company can better position itself to thrive in a dynamic and competitive marketplace.

If you want to know more about risk management in the retail industry, simply get in touch for more information.