The cyber and data threat is considered as the top risks by most retailers in the UK, followed by regulatory environment and financial concern, states a recent report.
According to Barclays Corporate Banking and economics research consultancy Retail Economics, cyber and data threats are viewed as the biggest risks by over a third (34 per cent) of UK retailers surveyed, with 70 per cent saying they form part of their top three risks over the next 12 months.
The study notes that this area is vital to address as retailers today are dependent on a range of technology to give their customers seamless access to products and services, and to perform basic operating functions.
The second-largest perceived risk is related to a more complex regulatory environment (52 per cent), which includes additional friction around international trade and more uncertainty around future environmental policy.
Financial (51 per cent) concerns were also cited in the top three, reflecting higher interest rates that have impacted financing costs, not just for retailers, but throughout supply chains, as well as impacting businesses in financing production.
While retailers are most concerned about cyber and data threats, they also feel most confident in managing them, having invested in technology to safeguard their operations. In fact, the vast majority of retailers (81 per cent) feel that they are either “where they needed to be” or “ahead” of the competition regarding cyber security issues such as ransomware, malware attacks, network security or fraudulent attempts to obtain sensitive information.
While "environmental and social" concerns were perceived as one of the lowest risks over the next 12 months (ranked six out of seven), it is an area where retailers feel least confident in mitigating. However, this risk was ranked highest by retailers surveyed when asked to identify which risks were most likely to rise in the next five years.
Karen Johnson, Head of Retail and Wholesale at Barclays, commented, “Part of the solution here is likely to stem from cross-industry partnerships between retailers and corporate organisations for instance in supporting climate tech startups and financing carbon reduction initiatives.”
To mitigate the challenges, the research identifies the top five actions taken by retailers- investing in technology, enhancing employee training and development, strengthening supply chains, diversifying product offerings, and improving crisis management processes.
Investing in technology and digital capabilities is at the forefront of resilience today, with 60.2 per cent of retailers citing this as their top priority.
Furthermore, almost half (48.4 per cent) of retail leaders surveyed said they have taken steps to enhance employee training and development. This focus on people was seen to not only boost operational efficiency, but also foster a culture of innovation, agility and leadership.
Disruption caused by the pandemic and geopolitics has put supply chains in the spotlight. Here, 46.2 per cent of retailers surveyed have invested in strengthening their supply networks, often by diversifying, investing in local sourcing, and utilising technology for real-time supply chain monitoring.
Richard Lim, CEO of Retail Economics, concluded: “The retail industry continues to face successive waves of disruption. In just the last few years, businesses have emerged from a global pandemic to face the worst cost of living crisis for a generation, all while technology has evolved at an astonishing pace. GenAI is the new buzzword in the industry, but many are struggling to grapple with what this means for their business and the future.
“It’s a huge credit to those who have continued to thrive, and it shows a resilient industry built on solid foundations. However, this should not be taken for granted. While retailers may feel prepared to tackle today’s rising threat of cybercrime, they need to remain alert, and seize the many opportunities emerging on the horizon.”