Australia’s retail industry is one of the pillars of the economy. People consistently need to buy goods and services, so it’s easy to see how a store has the opportunity to establish itself as a viable, long-term business.
That’s not to say that there aren’t still pressure points in an industry that is worth more than $23.6 billion, according to the latest Australian Bureau of Statistics (ABS) analysis.
The overseas market is more accessible for Australians than ever before, with people finding themselves able to shop globally online. The explosion of mobile devices also means they can now do this throughout the day, not just in the evenings as many managed before.
Imports are often free of any goods and services tax in the country from which they are sent, allowing retail businesses based abroad to get a price drop on many of Australia’s own retailers – the cost of shipping the goods is often lower than the added cost of tax, meaning importers still make a good profit.
Of course, this is a two-way street; Australian retailers can become more diverse and sell abroad, which is perhaps one reason why the local retail industry grew by an impressive – and seasonally adjusted – 0.4 per cent in January 2015, the ABS found.
And yet, there are a range of business risks that look to derail retailers in Australia, in part because of such a recent digital diversification.
Digital business risks
To operate intercontinentally, retail businesses exist in the virtual world as much as they do on the high street.
The great majority of these will have a website and offer added services as part of their e-commerce business – such as fast delivery, online customer support, and even shopping apps for a range of mobile devices.
When we consider how a bricks and mortar store used to operate, there are now more moving parts to a retail business than there have been before – previously, many consisted of only a counter, a stockroom and a salesperson.
This leaves more things that can go wrong, and it is often the case that one broken cog causes the whole process to falter. If your online checkout resource goes down, for example, it can cause backlogs in customer support and idle delivery departments.
Mitigating against data breaches
Unfortunately, one of the caveats of working in a constantly connected world is the growing concern of data breaches. According to recent research by worldwide cybersecurity professionals Gemalto, around one billion data records were compromised globally in 2014.
This is a huge 49 per cent increase of data file theft and a massive 78 per cent increase in either lost and stolen records compared to 2013.
A retail business can find data breaches particularly damaging. Stores – whether online or on the high street – hold customer credit card information on file, and even regular shoppers will be unlikely to come back to their favourite shop if it loses such precious data.
The concern is not going away, as the Gemalto research suggests, so it’s important to mitigate against the risk through a strong and complete retail business insurance plan.
By speaking with your broker, you will be able to use their expert knowledge of both the retail and insurance landscapes to find a suitable level of coverage.
MGA has more than 60,000 clients across Australia, and our widespread offices allows us to give specific assistance to a range of small to medium-sized companies.
Get in touch today to find out more.