BDO study: The top risk factors for retailers are…
The risk associated with a possible security breach claimed the top spot for the first time ever in an annual ranking of the top 25 risk factors by retailers. Security risks shared the top spot with general economic conditions, which have remained tied at the top since 2013.
That’s according to BDO USA’s 10th annual “Retail RiskFactor Report,” which examines the risk factors listed in the most recent SEC 10-K filings of the largest 100 public U.S. retailers. The study also found that retailers are bracing for new and emerging cybersecurity and data privacy legislation. .
“Retailers over the years have proven to be in tune with the industry-wide issues and trends that could pose risks to their businesses, and they are clearly not tone deaf when it comes to reacting to the urgency of cybersecurity,” said Doug Hart, partner in BDO’s Consumer Business practice.
Rounding out the top risk factors in the report were retail competition and consolidation; federal, state and/or local regulations; natural disasters/terrorism/geo-political events and implementation and maintenance of IT systems. (For a complete listing, click here
In other findings:
Impediments to e-commerce initiatives increased in ranking, noted by 57% of retailers in 2016, a significant contrast from 12% in 2007. In 2015, e-commerce accounted for 7.3% of total retail sales and is continuing to gain market share.
Ninety percent of retailers are worried about impediments to growth and U.S. expansion this year.
Risks associated with owning and leasing real estate jumped 14 percentage points to 54% this year.
Heightened worries over the impact of e-commerce on physical locations are far reaching, driving concerns over market competition for prime real estate and mall traffic to rise 19 percentage points to 46%.
Consumer demand for fast shipping fueled an uptick in risks around the increased cost of mail, paper and printing, rising 10 percentage points from 7% in 2015 to 17% this year.
Despite the fact that since 2013, general economic conditions have remained tied for the top risk, concerns about specific market indicators have receded.