The retail sector has its own set of vulnerabilities. Does your business know what they are and, more important still, have a strategy in place to keep on trading?

Retail has always been competitive, but lately competition has ratcheted up several notches. Some of the drivers of this are familiar—disposable incomes are under strain—but others are not. Among the latter category: the growth in competition from online stores, which increasingly undercut prices while offering greater convenience and personalisation.

In addition, customers habituated to the online world are notably less loyal.

Supply Chain RisksAll these factors mean that even the strongest retailer finds itself somewhat precarious. In this cutthroat environment, being unable to trade can damage a retailer, and often that lost ground can be hard (or even impossible) to regain.

Given this highly competitive environment, retailers need to understand their risk profiles, and make sure their business continuity plans are updated accordingly. Based on its experience as Africa’s largest and leading provider of business continuity management services, ContinuitySA has identified some of the top business continuity risks that retailers face:

Socio-political risks. All businesses face these, from political instability to strikes, but it’s worth noting that retailers are particularly vulnerable. They have large, highly unionised workforces, and their outlets are often the first targets if civil unrest breaks out.

Product recalls. Retailers constantly face the risk of contaminated or otherwise faulty products landing up on their shelves. Aside from the reputational risk involved—remember the contaminated baby food scandal a while back?—dealing with product returns or even a full-scale recall can be costly in both financial and manpower terms.

Supply chain disruption. Retailers sit at the end of a complex network of supply chains, some of which are very long. All of this exposes them to a wide variety of risk. Diversifying the supplier base is one strategy for risk mitigation, while some retailers maintain stockpiles of goods to provide a buffer in case of supply chain disruption.

Another important risk factor is that the retailer’s suppliers are themselves at the mercy of their supply chains. A business stoppage in a subsidiary supply chain can have a dramatic knock-on effect for a retailer.

It’s imperative to understand all the dependencies of your primary supply chain, and the effect that the inability of a supplier’s supplier to meet its commitments would have. Business continuity planning, especially in the retail sector, has to encompass the whole supply chain.

Next time, we conclude this focus on business continuity and the retailer with a look at the remaining risks.

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