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Retail & Wholesale

Retailers and wholesalers with retail operations face an evolving risk landscape, which is accelerating due to technology implementations and customer demands. With new needs for innovative risk consulting and transfer solutions, companies can rely on Marsh’s experienced global specialists.

The retail industry was already facing widespread change prior to the COVID-19 pandemic, with shifts underway towards online shopping and fast delivery. The pace of change accelerated during the pandemic, with government restrictions in a number of countries on in-person retail experiences and a customer preference for safe, contactless delivery and return options.

Although digitised shopping is by no means a new phenomenon, the surge in demand during the pandemic has created unforeseen challenges for retailers and wholesalers with retail operations. Business operations are being stretched to their breaking point, as retailers and wholesalers try to adapt to and manage an increasingly complex set of risks, from cybersecurity to supply chain disruptions.

Marsh’s experienced Retail & Wholesale Practice specialists can help your company anticipate emerging risk management needs and implement strategies to ensure stability and profitability in an era of uncertainty.

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Retailers are facing a more complex set of risks than ever before, as societies reopen to in-person shopping while the demand for online retail still remains strong.

As COVID-19 is still present on a global scale, businesses must contend with risks related to the return to in-person shopping experiences, including customer and staff safety, as well as profitability in light of increased utilisation of online shopping.

Some of the risks related to online shopping, such as cybersecurity, were present prior to the pandemic. However, others, like supply chain disruptions, have become much more of an issue as a result of complications related to shipping and logistics, including delays getting merchandise across international borders.

At a bare minimum, retailers should have general and products liability coverage to protect against claims of customer harm. Beyond this, retailers should consider a business owner’s policy, which covers your storefront, commercial buildings, distribution and data centres), any personal property that might be in these locations and any resultant loss of profit or additional expenses incurred to maintain sales. Any retailer with employees other than the owner is generally also required to have some form of , although this does vary by country. If your business is also involved in transporting merchandise or making deliveries, it is important to have commercial auto insurance to protect against accident and, typically mandatory, auto liability claims. Finally, retailers and wholesalers sometimes have to implement the recall of products that have been contaminated either accidentally or maliciously. This risk and its impact are insurable, including costs of recall and destruction of contaminated merchandise..

In addition, transportation-related coverage is generally required, such as coverage for loss and liability of merchandise in transit, including protection against damage occasioned through road, rail, ocean and air transit of merchandise. The greater reliance upon and volumes of home delivery also requires particular consideration in the current environment.

Any time business is conducted at scale, there is an opportunity for great profit, but also for tremendous loss. Retailers and wholesalers face a unique set of risks as part of their daily operations. First and foremost is a loss of merchandise, whether due to theft or disaster. Next, there is the inability to obtain supply, which can effectively disrupt business. Retailers and wholesalers may also become involved in product liability claims, as they were part of either manufacturing or distribution. Finally, other legal action may be pursued against wholesalers for a number of reasons, from non-delivery of merchandise to regulatory compliance penalties.

There are other insurances that are likely to apply include:

  1. Cyber Insurance
  2. Crime Insurance (historically referred to as Fidelity Guarantee)
  3. Specific Terrorism Insurance
  4. Professional Indemnity Insurance
  5. Directors’ & Officers’ Liability Insurance
  6. Stock Throughput Insurance (as an option to cover joint marine transit and stock storage risks under the one insurance policy)
  7. Surety Insurance (to replace or support any bank guarantee needs)
  8. Credit Insurance (to cover a wholesaler’s credit risk as a supplier or key supplier credit risk)
  9. Political Risk Insurance (associated with importation from/trading with international markets).

First, it is important for wholesalers to consider general liability insurance, similar to retail operations. This protects companies against claims of injury or other harm to customers as well as the general public. Other insurance policies to consider include workers’ compensation, if required in a specific region, as well as transportation-related coverage, such as commercial auto insurance, if applicable. Should a wholesaler be responsible for shipping internationally, it is usually valuable to have expanded coverage for loss and liability of merchandise in transit, including protection against damage made to a shipping vessel or other form of transportation by the merchandise itself.

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Marc Clements

Transport, Food and Beverage, National Practice Leader

  • Australia

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”