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Outlining the risks facing retailers

At a glance

  • Zurich’s Wholesale segment has been broadened to incorporate the ever-changing landscape of retail

Dave Christy, Zurich’s National Corporate Development Manager, talks to Insider about how the changing landscape of the high street has led to a number of new risks facing corporate and retail customers.

Q: Dave, Zurich has broadened the Wholesale segment of Corporate focus into ‘Wholesale and Retail’. What was the thinking behind this move?

A: Well, as we have developed more business in the Wholesale industry sector, the synergy between Wholesale and Retail, from an operational perspective, has become very apparent. In many aspects, our underwriting appetite and risk insight in the Wholesale industry could be applied to Retail business, therefore it made perfect sense to widen and improve our existing proposition by including it and the essential covers required for retailers.


Q: There seems to constantly be a new set of risks coming on to the table for retail customers – do you still see the sector as a good business opportunity?

A: Despite the apparent doom and gloom in the high street, the retail sector has grown consistently over the last 12 years. It employs over three million people and accounts for 8% of the UK’s Gross Domestic Product. We have the third largest retail industry in the world after USA and Japan. The industry may be going through rapid and significant change, but the British enthusiasm for shopping is unhindered.

Q: You mentioned rapid and significant change, so what are the new challenges being faced by retailers?

A: As with most businesses, complacency is not an option if a retailer is too remain successful. Last year saw a 6% rise in retailers going into administration on the previous year, but businesses who have adapted and changed their trading models to meet the market dynamics of on-line sales, higher consumer demands of the service proposition and increasing competition continue to perform well.

A broker’s insight into insurance and risk is invaluable to a retailer when considering their immediate and future plans for protecting their business

Q: With so many businesses now moving online, do you think this adds to the risks for firms?

A: Online retail sales have increased rapidly over the last few years. In fact by the end of 2012, over 10% of retail sales were sourced online. This is a four-fold increase when compared to 2007, and it is an area that looks set for continued expansion. For any retail business looking to grow, online is now a prerequisite and this naturally brings additional risk particularly around data security and brand protection.

Q: And what about the empty shops on the high street as a result? Is this situation bringing its own unique set of risks?

A: No one likes to see the number of empty shops appearing on the high street, however, it is an inevitable outcome of a changing retail profile. For a retailer, their future strategy may hinge on their property portfolio as they seek to rationalise their presence in towns and cities where the high street is unsustainable.

For example, why would they invest in risk protection and health and safety in an outlet due for future closure? This in turn impacts on the risks an insurer faces. Where there is no investment, the likelihood of claims frequencies across property and casualty risks will increase.

We have the third largest retail industry in the world after USA and Japan. The industry may be going through rapid and significant change, but the British enthusiasm for shopping is unhindered

Q: So for retail brokers, what are the key risks they should consider when working with their customers?

A: A broker’s insight into insurance and risk is invaluable to a retailer when considering their immediate and future plans for protecting their business. From an insurance perspective, a key aspect to consider is the accuracy of building valuations across the property portfolio to ensure the adequacy of insurance sums insured. However, it is the wider risk elements where true value can be added.

Health and safety management in active premises, such as a retail outlet, is vital to protect the business and their customers from accidents. Business Continuity planning and a detailed understanding of the supply chain will play a vital role in a retailer’s business recovery in the event of a major loss for them or one of their suppliers. It is also crucial when such an event occurs, to understand whether the business has the plans in place to protect their brand and reputation, as they go through the recovery stages. In all areas, a broker working with Zurich can make a difference.

Q: If you had a crystal ball, how do you think you would see the retail sector developing in the next 10 or 20 years’ time?

A: Statistics suggest the last few years of austerity have led to retail sales plateauing to some degree, but not declining. My personal opinion is that the desire to shop is built into the British public’s mentality, therefore as the economy starts to grow again, retail sales will move forwards at a pace. No doubt on-line trading is here to stay and will become ever more important for a retailer’s distribution strategy, however, people will also want to continue to physically see, touch and feel products before they commit to the purchase, meaning the need for shop fronts will remain.

David Christy joined Zurich from Marsh UK in 2002 as a national account executive for the Countrywide account.  Having held various account executive and senior account executive roles, David was appointed as area sales manager at the beginning of 2009, and in 2011 became the National Development Manager for Corporate. 

Image © Getty

For more information, get in touch

Dave Christy | National Corporate Development Manager | 07768 421 005

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