Strategy is the right word to use when talking about your risk management. Retailers should adopt strategies to minimize the risks that could force them to shut down their business, thinking ahead and accounting for all the things that could go wrong.
Let's take a quick look at your top five risks:
As we reported in By the Numbers, theft costs retailers 1.3 percent of their sales and can whittle away at your profit margin if you don't take steps to prevent it.
2. Data Breach
Whether it's an attack on your online store or your credit card processing system, a data breach could leave you with massive tech bills and thousands of frustrated customers.
3. Damage to inventory
Damage to inventory.
A windstorm, tornado, or power outage could leave your store with a costly surplus of spoiled or damaged inventory.
4. Customer injury
Icy sidewalks and rainy days could lead to huge legal bills for your store if a customer slips and falls.
5. Competition from big box stores
Competition from big box stores.
Let's face it: being a retailer more difficult than ever. You're competing with big box retailers and billion-dollar ecommerce companies like Amazon. The wrong marketing strategy could mean your business goes belly up.
While stores should have a plan to prevent some of the top risks, certain things like the weather or disgruntled customers are unpredictable.
Retailer Risk Management Strategies: Cutting Your Top 5 Risks
How do you plan for the unpredictable? While no storeowner knows what will happen any given day, you can prepare by ensuring your business has the financial support and infrastructure to survive bumps in the road. Here are some ways to cut down on your top risks:
- Theft. To cover day-to-day theft (as opposed to burglary), retailers often invest in security systems. As we covered in "4 Retail Inventory Management Tips to Prevent Theft," there's more to it than just that. Training employees, performing spot checks, and posting signs are some tried-and-true ways to prevent losses from theft. Being a visible, involved business owner sets the tone for your employees and makes sure your team is focused on preventing theft.
- Data breach. Many recent retailer data breaches were facilitated by hacking stores that used ancient point-of-sale technology. Updating your technology can prevent some hacks, but not all. Cyber Liability Insurance (aka Data Breach Insurance) may pay for the cost of a data breach and help you fulfill your legal obligations, prevent customer identity theft, and limit the damage of a cyber attack on your POS system or ecommerce site.
- Damage to inventory. Property Insurance can be customized to offer better protection for retailers. Some policies can include coverage for spoilage if the power goes out and your fresh foods, flowers, or other goods spoil. Traditional coverage can also reimburse retailers for losses from fire, burglary, wind damage, tornadoes, and minor storms. If you need flood or natural disaster coverage, ask your insurance agent about adding this to your policy.
- Customer injury. If a deliveryman, customer, or other third party slips on your floor and breaks their leg, you could be looking at legal bills that are more than your life savings. General Liability Insurance is a store insurance policy that may cover legal costs when customers and other third parties sue you over these accidents.
- Competition from big box stores. Unfortunately, there's no insurance that protects you from a big box retailer opening up a store down the street from you. Regardless of the type of store you run, you're competing with major retailers and online merchants. To protect your business, you should remember to stay adaptable. Read our blog Retail Details to stay current with changes in the retail industry and learn more about your liabilities.
Because Insureon's agents have helped thousands of retailers prepare for all sorts of financial risks, we can design custom insurance to address your biggest risks — regardless of whether you sell fine art or power tools.