If you believe the headlines, retail is on its way to extinction. While this may be an overstatement, what are the actual risks facing retailers today? The 2017 BDO Retail RiskFactor Report ranked the biggest risks threatening retailers. Here are seven of the top items on the list and what you can do to defend against them.
Top Risks from the 2017 BDO Retail RiskFactor Report
General Economic Conditions
Like all businesses, retailers are at risk from ups and downs of the economy. Protect your store as best you can by staying on top of economic news about your local market as well as regional and national ones. Having a diverse customer base can help buffer you against economic changes that drastically affect your target customers’ spending. Or try adding an e-commerce component to your business so you can reach a wider market (or even sell internationally).
Security Breaches
With big retailers being struck by security breaches every day, small retailers have reason to be concerned, too. Secure your store network and restrict access to sensitive information only to those employees who need it. If you offer free Wi-Fi in your store (which you should), set up a separate guest network for your customers. This FTC website offers tips and resources for cyber security.
Federal, State, or Local Regulations
New regulations can take retailers by surprise. As with economic conditions, the best defense is to keep abreast of proposed regulatory changes that could affect retail in general, your region or your specific retail niche. Getting involved in industry organizations can help you stay current on this information, and also give you the clout that strength in numbers brings. Whether as part of a group or on your own, make your opinions known to legislators.
Suppliers and Vendors
When a key supplier raises prices, goes out of business or pulls their product from your store, you can be in big trouble. Work hard to maintain good relationships with suppliers and vendors, especially those who provide your core product lines. However, it’s a good idea to have some backups, in case you need to turn to them. Diversifying your vendors not only expands your product selection, but also helps protect you from one supplier’s whims.
Labor
Retailers seem to have escaped a change in overtime regulations proposed by the previous administration that would have significantly increased labor costs. But that doesn’t mean good retail employees are getting any easier to find. In today’s competitive environment, it’s more important than ever that your store is sufficiently staffed. Make your store a good place to work, offer competitive pay, and be willing to train employees who have great attitudes but not much retail experience, and labor will be a lot easier to attract and retain.
Implementation and Maintenance of IT Systems
There’s no getting around it: Technology is more important than ever to your store’s competitiveness. Although selecting, implementing and getting up to speed on new technologies may seem intimidating, it’s a must if you want to stay in the game. Invest the time and money necessary to equip your store with the technology needed to serve your customers quickly and conveniently.
Availability of Financing
Of course, all that new technology comes at a cost, and for small retailers, financing isn’t always easy to come by. Be prepared by maintaining a strong relationship with your business banker and investigating all your options for financing. Getting a business line of credit, for example, before you actually need it can give you the flexibility to make necessary investments.
Talking to Customer Photo via Shutterstock
This article, “The 7 Top Retail Risk Factors Your Small Business Faces” was first published on Small Business Trends