Retail Industry global market, which is expected to grow from $20298.69 billion in 2020 to reach $29361.95 billion in 2025 at a CAGR of 7%, is undergoing a massive change in its marketing structure. This envisages changes resulting in Product Management strategies, Pricing Strategies, Distribution strategies, and Promotion strategies
These changes are brought about mainly due to changes in technology, human behavior towards shopping, new entrants in the retail sector, new products, new marketing strategies, global economic changes, political strategies, climatic changes etc. These changes also bring about changes in the various dimensions of risk which are presently in vogue for the retail industry. An adaptive approach to risk assessments, synergic management, and development of new controls, processes, and organizational structure is required to meet the challenges put forward to the retail industry by these changes
Dangers facing the Industry
Risk appetite of the retail industry has been deemed at a higher level than most of the other industries, due to the complexities arising from marketing technicalities, and management structuring in a cost effective manner. The necessary due diligence on risk management strategies from the very onset of a project needs to be revamped in the industry.
Lack of capability for establishing appropriate risk management strategies, building the necessary infrastructure for the same, and lack of management responsiveness to the risk escalations have drawn the industry into deeper turmoil than the appetite prevalent to exist.
If you place a broad perspective on risk assessments, the dangers may be identified as follows
Change Management risks
Absence and Compliance to processes and policies,
Shoplifting – Customer thefts and Kleptomania
Vendor thefts
Mistakes
Employee Theft
Organized Retail Crime
Fraud schemes – Billing, Cash larceny, Teeming & lading, Check and payment tampering, Corruption, Expenses reimbursements, financial statement frauds, Non-cash, Payroll, Register disbursements, Skimming, etc.
Wastages
Documentation errors,
Natural disaster losses,
In-transit losses,
Product liabilities arising from claims,
Product contamination and recalls,
Credit card chargebacks,
Regulatory fines,
Currency exchange losses,
Spoilages,
Fraudulent returns in Online transactions
Breakages
Voucher / loyalty card abuse
Risk Consulting for Retail Industry
Being aware of the various fraud schemes, shop shrink factors, control requirements to close risks, policy and procedural requirements to be compiled in the retail industry for the specific sector, to be borne by a professional risk consultant. This requires exposure and research into various dangers in each of the domains under each sector of each area of the retail industry. The risk consultant’s awareness in the areas of control requirements for each potential threat is necessary to add value in their association with you.
A true professional Risk Consultant shall always consider your risk population to plan out the audit strategy. Scoping of the audit structure or domains is very much a critical aspect in the Internal Audit functions development in your organization.
Trading includes products like Food stuff, fashion, watches & Jewellery, Building materials, pharmaceuticals, Electronics, etc. Each product has distinct features which demarcates the audit concerns within the organisation. This may be contributed by the need for expiry control, regulatory compliance, inventory management stipulations, stocking needs, delivery styles from dry to cold chain maintenance, stock rotation needs, seasonal demands, change of fashion, technology, and many many more.
The need for outlet auditing process which demands visual merchandising, promotional aspects, IT infrastructure to support bar code based Point Of Sale facilitation, and multi model payment supports, etc are the unique benefits derived from internal audit activity from PROVEX CONSULT
We have modelled our audit process to approach the audit activity with specific customization relevant to the product dealt in the trading organisation
Distribution/Wholesale/ Retail Risk Consulting