Deciding What’s Important to Your Retail Business

The first thing you need to do when building your BC system is to consider exactly what your retail business needs. As we discuss in this section, BC for the retailer concerns the supply of goods to your customers and inevitably centres on stock, outlet and theft – you don’t want to waste scarce time and resources on protecting anything that isn’t essential.

You identify your own business’s precise key products and services, and the critical activities that underpin them, through a Business Impact Analysis (BIA). We talk about this process in Chapter 4, and it’s the first step to take in building the foundations of your BC system. After you’ve identified where the vulnerabilities of your business lie, you can think about how best to support them.

Despite being a nightmare scenario for retailers, think about what you’d do when faced with the summer 2011 riots (see the nearby sidebar ‘Riot!’). Identifying where your business’s weaknesses are, supporting vulnerabilities and having BC plans ready to come into play are all part of making your retail business more resilient and better able to cope with such incidents.

Securing your supply of stock

Your customers are the source of your profit, and so a significant part of your BC planning is ensuring that you always have the means to supply and satisfy them so they don’t have to shop elsewhere because you’ve run out of stock. If customers travel to your shop only to find that you’ve sold out of what they’re looking for, you may well lose their business to a rival company. Whether you sell individual units to customers or crates of products at a time, you need to ensure that you have the contingency plans in place to meet the demand.

Estimating stock levels can be tricky, especially when you’re dealing with perishable goods or products that are likely to remain popular in the market for a short amount of time only:

Ordering too much of a product can lead to wasted goods and wasted money.

Ordering too little can result in the loss of customers when they’re forced to take their custom elsewhere.

Getting used to estimating sales figures accurately and using past trends to guide how you order and carry contingency stock are helpful for every retailer.

Such forecasting doesn’t have to involve anything too complicated and you certainly don’t have to be a mathematical genius to work it out. We describe the general process and figures you need in Chapter 7, but in its most basic form, forecasting simply involves looking at different factors, such as current and past sales and things that are likely to have an impact on sales numbers (not forgetting to take into account any promotions or voucher schemes that you’ve been running). We discuss a few particulars of forecasting for retailers in the rest of this section.

Compare the average unit sales in months at a time to iron out any disruptions to profits caused by short-term issues such as roadworks or employee sickness. But remember to take note of any significant or anomalous events that may cause monthly figures to deviate from the norm for that time of year. If February 2011 was plagued by unusually heavy snow, for example, this may have impacted the whole month’s profits: but that doesn’t necessarily mean you should expect sales to be quite so bad this February.

Forecasting is only an estimate comprising last year’s figures, but it does help you to average out how much stock per week you’re likely to need and predict the peaks and troughs that are natural to the retailer. You can also learn from these patterns: did you at times under- or overestimate the amount of stock you needed, and if so why didn’t your actual sales meet your estimations?

After you estimate your forecasting, you can decide how many weeks’ cover (extra stock) you think you need to carry. For example, if you have a number of suppliers who work locally and you know that you’d be able to get products from alternative business if your primary supplier lets you down, you may not need to carry more than one week’s extra stock in case of your main supplier suffering an incident and taking weeks to recover. Therefore, you simply use your estimate of the stock that you need for the next month and divide it by four.

The amount of contingency stock that you decide to carry also depends on how much space you have to store it. If you sell non-perishable goods and have a spare warehouse to fill, you can look to carry enough stock to see you comfortably through a snowy winter (although, of course, you do need to factor in the cash you’re tying up). If you’re limited on space, however, and you sell, say, fresh food that won’t last longer than a few weeks, you can’t carry more than a week’s worth of cover.

As with all aspects of BC, discover what’s best for your firm and adapt your strategies accordingly. We’ve no right or wrong answers here, just a means of planning what works best for you.

Protecting your retail outlet

As a retailer, you have to consider what would happen if you could no longer operate from your present premises. Do you have another location to sell from or would you have to close business until your original premises are fit for use again? Access to your outlet, for staff and the public, is essential to running your business, and so ask yourself: if only one small road leads to your shop, what would you do if it were blocked by snow or two weeks of major roadworks?

Investigate the possibility of trading from an alternative location, or having some staff work from home. For example, employees can do tasks such as ordering stock, speaking to customers and arranging deliveries from home. If a shop is an essential part of your business and your usual premises become unfit for use, however, having a similar alternative is a must.

Consider the things that you can put in place now to source this alternative premises. What equipment, communications lines and information technology (IT) would you need to keep trading?

Alan Sugar began his successful trading career by selling from the back of a van. If you don’t have any other place to operate from, this option may be a suitable alternative for your business. Or, in this day and age, use technology, and look into whether selling the same volume of goods over the Internet may be a viable backup for your business. You want to explore the option now while you have time on your side, instead of finding yourself setting up a website during a disruption while simultaneously trying to deliver your products and keep your customers satisfied.

When investigating alternative premises, think about whether you have somewhere you can store your stock if your warehouse floods. Consider the practicalities: would your suppliers be able to deliver to a different location at short notice, and would they be confronted by access restrictions if, for example, they were unable to drive their delivery vehicles down a small country road? In addition to considering the risk of hazards and disasters to your premises, the security of your outlet is something to assess regularly. Eliminating as far as possible the chance of a break-in is a big part of BC planning and a consideration you need to keep updated (flip to the later section ‘Tackling theft and damage’ for details). You also need to factor in the maintenance of clear fire escapes into your risk assessments and BC plans.

You have a level of responsibility to customers while they’re in your shop and so don’t forget to ensure that your premises are a safe and comfortable environment for them. Not only are you legally obliged to uphold a safe environment for your customers and staff, but you also want to protect yourself from the legal implications if a customer slips and is injured in your shop. Check out Chapter 12 for more on your legal responsibilities in this area.

When thinking about the health and safety of your premises and the associated risks, don’t neglect to take the simple measures and assessments that you make around your home and in everyday life. For example, does the smoke detector have batteries in, does your burglar alarm work and are your windows secure? Do you have a spare set of keys for the back door and are fire exits clear?

Make sure that all your contacts and paperwork are up to date too. If the worst happens, such administrative information can be critical to your business continuing to operate. You need access to insurance details, customer information, tax returns and other essential paperwork. When is a good time to review all your documentation and insurance policies? Now! Lack of backed-up or up-to-date documentation was a particular problem for retailers making claims following the aftermath of the summer 2011 riots that began in London (check out the earlier sidebar ‘Riot!’). Make sure that you aren’t caught out and discover too late that you weren’t protected as well as you hoped.

Tackling theft and damage

The goods and products that you sell are the basis of your business. They’re the focus around which you base your organisation, the things that you advertise and the market that attracts customers to your outlet. Therefore you need to do everything you can to protect your stock against theft and damage. Customer theft can have a particularly devastating impact on small businesses, and investing in secure crime-prevention measures can avoid a burglary or break-in that can see the loss of your most important assets. (For the associated but slightly different problem of employee theft, read the later section ‘Combating staff who steal’.)

As a retailer, you’re particularly vulnerable to theft, and so it’s a good place to start your BC considerations. Crime-prevention measures are especially important to the retailer; losing even small amounts of stock at a time can cost the small business dearly. Interestingly, although the BRC Retail Crime Survey 2011 shows that fewer incidents of crime were reported in that year, 2011 did see an increase in organised and higher-scale crime – which is where the impact to the retailer is more financially devastating.

Of course, the level of crime prevention that you need depends on the type of products that you sell. For example, if you run a furniture shop, customer theft is perhaps less of an issue than if you sell jewellery, because legging it with a sideboard under each arm is pretty tricky.

Protection such as CCTV is a huge deterrent to a criminal, and having cameras carefully placed can help catch someone if you do become an unlucky victim.

Seek advice from your local Neighbourhood Policing Teams and build good relations with the police. They can advise you of local crime trends and provide crime-prevention advice that you can adapt to the specifics of your business. These authorities exist to provide a service and make your local area a safer place to live and work, and so take advantage of any information they have on offer. Check out the useful website www.met.police.uk/crimeprevention/business.htm .

Look into whether you have a local crime prevention officer (CPO); this is a bit of a postcode lottery but many local authorities do offer this service. A CPO can help you conduct a security risk assessment, which involves having a walk around your premises and identifying any threats to your business property. You can also examine your community risk register, which contains advice and information for small businesses. The local authority can advise you on your BC plans in a way that’s specific to the risks and hazards of your local area. Research the type of retail crime that’s common in your area and to which your type of business may be at risk.

Report all instances of burglaries or thefts to your local police. Providing information about any victims, damages and the value and nature of the losses helps the local authorities to build up an accurate idea of the crime risks in your area. This information in turn informs businesses of any crime patterns or trends; for example, indicating the methods of entry that thieves use or the type of shops they target.

Don’t believe that stock is the only thing of value for a thief. Consider where you store all your valuable information too. If everything is at your shop premises, without a backup, how are you going to recover your important data if thieves break in? Do you have any systems in place to ensure that your information is available when you need it? Simple measures such as having hard copies or photocopies of contracts stored safely at an alternative location can save you vital time and labour if you lose the originals.

A good approach to security is to consider how your premises appear to thieves. Play Columbo (raincoat optional) and try to view your property and arrangements from a criminal’s point of view:

Think about whether your premises look like a secure unit or as if it’s ‘inviting’ in unwanted visitors:

• A large amount of clear window space, so that staff can see out and customers see in, puts people off attempting to break in because they feel like people can easily see them or interrupt.

• Too much advertising on the windows limits exposure from the inside and means that certain areas of the premises are concealed from the outside view.

• Lights on in your shop at night suggests to criminals that they’ve nowhere to hide inside.

Reduce the amount of cash that you have in your till and don’t ‘advertise’ it. Having a till full of notes coming into view every time you make a transaction is advertising money to potential thieves. Make sure that you visit your bank frequently but irregularly. If you can, try to go to the bank to cash earnings at different times of the day in case potential thieves take an interest in you; not carrying the money in the same bag each time is sensible and use an inconspicuous one.

Consider the location of your shop: if you’re situated along a main road with other outlets around and people walking past both day and night, perhaps you’re less likely to have your front window smashed and someone breaking in at night. However, with lots of customers coming in and out all day, you may be vulnerable to low-level, opportunistic theft. On the other hand, a quiet local shop may not be a target for thieves during the day, but they may try their luck to see whether you’ve left cash in the till overnight.

Crime prevention isn’t only about keeping your stock and premises secure; you also need to ensure that your staff members feel safe and comfortable in their workplace. This security encourages greater productivity and allows employees to go about their work unhindered by worry for their safety.