NIG

News & Views

You'll find a whole host of useful articles, features and interviews on our NIG News page. We aim to offer useful business updates, topical thought leadership and much more. We hope you find the content offers real value.

What’s next for the retail industry?

28 August 2019

Estimated Read Time: 4 minutes 15 seconds

The retail sector is the UK’s largest private sector employer, with one in 10 people working in the industry and total annual sales topping £350 billion[i].

The latest economic indicators from the Office for National Statistics show that retail sales are performing better than expected in 2019. They were up 3.3% in the year to July[ii], with food sales the only area in decline.

We take a closer look at some of the key challenges and opportunities facing the industry and how NIG can help the sector prepare for the future…

Demise of the high street

Retailers are continuing to move out of city centres and into out-of-town retail parks, which offer free parking and are often conveniently located near main roads.

This has inevitably led to an increase in the number of empty shops on the high street. Unoccupied property poses high risks. As well as being vulnerable to malicious damage by vandals and arsonists, it may also fall into a state of disrepair if it isn’t maintained.

This can cause insurance premiums to soar, which is why making sure empty shops are clear of any combustible products, and taking steps to proactively assess any other risks is so important.


Rise in online shopping

Internet shopping now accounts for almost 20% of all retail sales in the UK, according to ONS figures[iii]. Consumers shop online using a variety of devices, including smartphones, tablets and Smart TVs. Cyber criminals are becoming increasingly sophisticated in their efforts to target electronic payment systems, which is why it’s reassuring for retailers that cyber cover can protect against the threat of digital attacks. NIG’s Cyber Cover is available alongside our range of complex products and includes cover for locating and removing viruses as well as loss prevention measures to help prevent further damage.

The rise in online shopping had led to huge opportunities for the industrial warehouses sector. Retailers with fast online delivery times and distribution centres in key locations have a competitive edge. From an insurance point of view, home deliveries mean fewer risks of slips, trips and falls in stores, but it does open the door to other potential hazards, for example couriers could slip or trip on people’s doorsteps or be involved in an accident while driving to their drop-off point.

Some stores are holding more stock to reduce the amount of warehouse space used and how often staff need to bring stock on to the shop floor. When more stock is stored onsite, it can increase public liability and employers’ liability risks. If it’s stored below shelves, it could get damaged in a flood, while employees lifting heavy boxes down from top shelves may be more prone to injury.


Supply chain risks

Retail businesses need to be prepared for supply chain issues, especially with the Brexit deadline looming.

With around 50% of the UK’s food imported through Dover and Folkestone[iv], there are concerns that there could be delays at ports in the event of a no-deal Brexit. This could drive up costs and cause shortages of vital supplies.  The supply chain can also be impaired if reordering systems get hacked or vital data is lost. Computers infected with a Trojan horse virus or other malware can cause critical operations to go down, with trading suspended until the problem is fixed, another reason why cyber cover is so important.

It pays to have the right level of protection in the event of a major loss. Our Business Interruption calculator gives guidance on the indemnity period required and sum insured. It also takes seasonality into account – crucial to many retailers. For example, if a greetings card shop is impacted by a supplier not being able to print Christmas cards, their business profitability may be affected for a couple of years because large-scale card printers are not easily replaced.


Staffing challenges after Brexit

With the prospect of a no-deal Brexit looking increasingly likely, many businesses are anxious about what it means for their staffing levels. The UK retail sector currently employs around 316,000 EU nationals[v], but free movement will end after we leave on October 31.

Some migrant workers will stay in the UK after Brexit, but it’s likely we’ll see fewer EU workers entering the country once the immigration system is tightened. Retailers will need to focus on retaining key staff. One way could be to encourage existing EU employees to apply for settled status now, if they’ve already been living in the UK for five years. There will also be opportunities to train homegrown talent through retail apprenticeships.


Future-proofing with NIG

The retail sector is facing some big changes in the coming months and businesses can prepare head-on by making sure they have the right insurance in place to protect themselves.

NIG’s Retailers Combined product covers Material Damage and Business Interruption, as well as Employers', Public and Products Liability, with flexible policy limits which have the potential to be uplifted. Brokers can access our Business Interruption cost calculator free of charge, to help calculate what level of protection their customers need.

For more information head to NIG.com to take a closer look at our policy features and benefits or give your NIG sales contact a call.

[i] https://www.telegraph.co.uk/business/tips-for-the-future/future-of-retail/

[ii] https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/july2019

[iii] https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/july2019

[iv] https://www.retailgazette.co.uk/blog/2019/02/can-retailers-expect-brexit/

[v] https://researchbriefings.files.parliament.uk/documents/SN06077/SN06077.pdf