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Spotting the Swirls

Sailing the stream of retail is canopying between opportunities on the surface and risks as the current of that stream. If the bad swirls are not spotted in advance, it can turn things undesirable. While big brands grapple with issues like lapses in cyber security, union strikes, and economic downturns, small and medium retail stores face the brunt of risks like competition and inventory management. Every retail business is subject to risk exposure.

Understanding and mitigating these risks is crucial for retail businesses to ensure smooth continuity. This blog highlights five big retail business risks with a constructive approach to taming them.

Retail Stagnation

If asked about business, one of the most common responses by retailers is ‘market is cold’. By this, they mean less footfall and less sales. This is what stagnancy can feel like. Retail stagnation is a reality and a big risk experienced by all businesses at different points.

Stagnancy in retail emerges for various reasons. Failing to keep things changing tops the list of culprits. Customers do get bored of seeing and experiencing the same values and offerings over time. These include both tangible (e.g. packaging, store front) and non-tangible (e.g. services) elements.

Failing to adapt to changing consumer tastes and preferences is the next big reason. The tastes and preferences of customers are affected by many factors including the emergence of new trends (fashion), social media (awareness, infotainment), actions of competitors, eCommerce, new business models, better value propositions, etc. Not adapting to these changes lowers store footfall.

If there is no dramatic change in the local demographics, then where are the customers buying from? ECommerce does not serve as a convincing answer, at least not for all product categories. People attribute this to all sorts of reasons from politics to economics. Elements from the external environment can indeed affect retail sales but it is like blaming the weather and not carrying out the required measures.


Retail stagnation can be dealt with in several ways. For starters, innovation and experimentation are the keys. Retailers should not hesitate to try new things. They can tinker with value propositions, try new technologies, redecorate the storefront, alter the interiors, add new elements to improve customer experience, etc. The buzz such changes create is important to keep things interesting to customers.

If footfall is declining, think not only of attracting customers back but also of adding extra punch to their brand experience. Whatever the quantum of footfall, provide better value and services to those customers. Treat this like a reset button where you rebuild your customer base.

In addition to feedback from internal and external stakeholders, data analytics also provide much-needed guidance in formulating informed strategies to overcome stagnation. If reports show that one set of efforts is not working, another should be put into action. Every effort will be an incremental one because of data-based insights and learning from past efforts.

Collaborations with banks and other financial institutions for offers and deals might work if the reasons for stagnation are more economic.

Overstocking and Understocking

Two distinct signs of poor inventory management are overstocking and understocking. Both situations convert into significant challenges for retailers affecting everything from finances to customer experience.

Overstocking traps liquidity affecting the ability to cover other operating expenses. Merchandises that are procured to fulfil any ongoing demand may remain unsold if they are bought in excess resulting in financial losses.

Excess stock levels adversely affect the inventory turnover rate. A higher turnover rate means a longer time to get the investments back and putting stress on working capital.

Holding unnecessary stock also swells the holding costs and eats up space for inventory that may be more relevant at a given point. Overstocking makes store rooms and warehouses unorganised. This physically affects the flow of work and productivity.

The final blow of overstocking comes when retailers resort to offering heavy discounts to clear excess stock. This not only has financial implications but also hurts the brand.

On the other hand, understocking comes with its own set of pain points. It leads to a loss of potential sales and revenue. This is a bad outcome, especially in festive seasons when the purchasing spree is high among customers.

Customer experience and loyalty are also affected if under-stocking persists. If under-stocking situations go unchecked, it is only a matter of time before customers will start considering other stores.

The knee-jerk reaction to under-stocking is to invest in quick restoration of stock levels. This often proves to be costlier and an unorganised approach exhibiting the lack of control.


Overstocking and under-stocking situations arise because of poor inventory management. The recurring problem of mismatch in stock levels shows two failures. One is the inability to forecast demand correctly. The other is the inability to procure stocks on time. The former problem can be solved by using appropriate demand forecasting tools and techniques. The second problem can be addressed by implementing reliable stock monitoring systems and robust purchase policies and processes. Other important considerations are inventory classification, turnover rates, storing capacities, and SLAs with suppliers.


Competition is a double-edged sword. On one hand, it leads to creativity and improvement, and on the other, it also exposes businesses to risks of survival and success.

Extreme competition is often followed by price wars among businesses. It is not good for any business in that group because the lowering of prices by one is quickly reciprocated by the others to remain in the fray. This affects the profitability of all the players. Apart from price adjustments, businesses also make changes in their value propositions.

With competition, it is also difficult to maintain the distinguishability of a brand with homogenous products and services. Re-branding and promotional campaigns are used as measures to stand out in the competition leading to additional investments in advertising and promotional campaigns.

The ultimate effect of these competitive actions and counter-actions is that each player is left with uncertainty and a lack of confidence in market behaviour. This hampers the confidence of retailers to come up with effective, long-term business moves.

Given the opportunities that galore in growing economies with suitable demographics, competition is bound to emerge in such markets. Retailers cannot avoid the exposure to the risk of competition.


Dealing with competition has no specific universal answer. The strategies to deal with competition depend on the nature of competition. For example, a price cut by a competitor can be responded to with a price cut. Home delivery can be responded to with home delivery. Things get trickier when the scope of creating any competitive advantage is thin. However, this is also where getting competitive becomes interesting and calls for revisiting the notions used in retail business model development.

Retailers can focus on identifying and catering to niche markets. This is when a retail business seeks to attain specialisation. Catering to a niche segment involves meeting advanced levels of requirements. For example, a general bakery business can transform into a cake specialist. A cake specialist bakery might offer an extensive range of flavours or custom-made cakes on quick notice.

Enhancing value propositions is also a powerful strategy. It can include an extension of merchandise (wider product mix), superior customer support, personalisation, membership deals and discounts, urgent deliveries, etc.

Going omnichannel in the true sense means having a reliable integration of offline and online capabilities without any compromise on the solo performance of either channel to the applicable extents. Many retail businesses start their online sales channels but are not truly omnichannel. For example, some grocery stores offer online ordering but without any online platform to do so or without a robust delivery system. In such cases, neither of the channels is in a good performing state. The integration of online and offline channels does not mean covering the weaknesses in each other. First, they must both stand as independently working channels with no deficiencies in carrying out their respective functionalities.

A vital requirement to counter competition is ongoing market research. To come up with strategies to counter competition, businesses need to first remain cognizant of the competitive developments. Without this awareness, they cannot take timely action.

In today’s retail scenario, building a strong CRM is highly recommended irrespective of the degree of competition. The reason is that competition is bound to come. The sooner CRM activities start, the more time is available to develop and solidify brand loyalty.

Supply Side Disruptions

Supply-side disruptions come as a big shock to retail brands and businesses. While the implications of these disruptions vary they often catch retailers off guard. Various causes of supply-side disruptions include adverse global/domestic/local events, political standoffs, trade wars and tariffs, union strikes, technological issues, etc. Anomalies in the supply chain can lead to a wide range of consequences. The inability to fulfil orders along the supply chain is the most direct outcome commercially affecting all value chain partners. This supply shortage also leads to unprecedented price hikes whether it is vegetables or microchips. Customers delay their purchasing decisions unless their requirements are important and urgent. Despite low sales, many operational activities and expenses cannot be stopped like payment of rent. If the disruptions persist for long, retailers go lean on staffing. The aftershocks of all these direct and indirect consequences continue to affect businesses for a long time. Recuperating from such down phases is challenging for micro and small businesses.


The risks of supply-side disruptions are external. However, retailers can prepare their businesses in ways that would minimise the occurrences or the impact of such disruptions.

The first thing to do is bring diversification in the supply chain. Relying on a single source of supply is a risky proposition. Tomorrow, if that one option becomes obsolete even for a short period, facing an inventory crisis is imminent. The possibilities for such obsolescence are always real for many reasons.

Like CRM for customers, retailers should also have strong relationship management with all value chain partners. Communication and close working ties help in anticipating and addressing any potential roadblocks in the future.

Big retail brands must consider the use of the latest technologies like AI to monitor and predict potential disruptions in the supply chains.

While taking the necessary measures helps, the element of uncertainty can never be fully addressed. That is why it is also important to be transparent with customers. It is a good practice to always keep customers informed of the possibilities of supply-side disruptions.

Deteriorating Customer Orientation

Deteriorating customer orientation is common after attaining a certain market stature. It is the ghost in business that every hard and smart working retailer should remain wary of. It is a subtle risk that usually accompanies success. This phenomenon is reflected in various forms.

The falling quality of services by sales staff is one of the signatures of retail brands that have begun to show disregard for customers. Customer support systems become poor in such organisations. They may have scores of branches and counters with a strong digital presence and yet are marred by highly ineffective customer support or grievance redressal mechanisms. HR strategies and processes do not find emphasis in such organisations and it reflects in the expertise and enthusiasm of employees when dealing with customers.

The story does not end there. Unhappy customers share their brand experience with their family and friends amounting to word-of-mouth marketing but towards the undesirable shade. Fake reviews and biased opinions are short-lived. However, if the lack of customer orientation is real, the fire will catch up sooner or later.

Other apparent shreds of evidence of a retail brand lacking customer orientation and disregarding customers are decreased footfall, old customers not coming back, poor reviews on online channels, failing efforts of advertising and personalisation, increasing CAC, etc.


Service is one area that should find prominence in becoming and staying a customer-oriented retail brand. Customer service and support can be improved in many ways. Providing technical and soft skill retail training to frontline employees is crucial to go beyond routine affairs and resolve grievances and perform par expectations. The use of retail SOPs is highly recommended to help employees execute complex processes and handle difficult situations with ease and effectiveness.

Personalisation is also an effective solution to establish better transactional bonding with customers. However, personalisation should not look like a one-sided business effort to sell more. Unfortunately, even personalisation is becoming standardised nowadays. The right way to approach personalisation is to present unique offers not available in general.

Retail businesses should exercise caution while handling complaints and reviews on online platforms like search engines and social media. Many brands shut off their comment sections or get into an altercation mode when facing negative reviews. Even if a review appears to be biased or motivated, the nature of the response should exhibit a willingness to help and resolve the issue in question.

The presence of customer orientation stands exposed when customer queries or grievances are responded to with bland, generic answers of which customers are already aware. For example, many brands have a presence on X (formerly, Twitter). In many instances, it has been found that companies respond vaguely to customer queries and grievances. Customers see such a lack of transparency and disregard as a red flag. The right way to deal with this is to ensure that proper SOPs are in place leading to effective resolutions instead of redirections.

Feedback and reviews should be welcomed and appreciated followed up by necessary communication on actions taken for resolution.


Risks are not the same as challenges. Risk is exposure to adverse situations. If risks are left unattended, they can turn into challenges. This applies to retail businesses as well. Five specific risk factors in retail are stagnation, overstocking and under-stocking, competition, supply-side disruptions, and deteriorating customer orientation.

Failing to keep things interesting tops the list of reasons for stagnancy in retail. To deal with this, retailers should be open to trying new things, seek to deliver better CX, focus on existing customer base, use analytics for insights, and consider collaborating with unconventional but potential value chain partners like banks and NGOs.

Overstocking and under-stocking are the outcomes of poor inventory management. These two risks can be tamed by using suitable demand forecasting tools and techniques, implementing reliable stock monitoring systems and placing robust purchase policies and processes.

Competition in retail is as true as the rising of the sun in the east. It leads to price wars, difficulties in maintaining brand distinguishability, and a growing lack of confidence in market behaviour. Countering competition has no universal, fit-for-all solution. The strategies to counter competition depend on the specific conditions and the nature of competition. Still, some proven strategies include catering to niche segments, going omnichannel, enhancing value propositions, and maintaining a robust CRM.

Although supply-side disruptions are external in nature, proper assessments and planning help to minimise the occurrences or contain the impact of such disruptions. Effective solutions to deal with this risk include diversification in the supply chain, building close working ties with supply chain partners, and maintaining transparency with customers.

Deteriorating customer orientation is a subtle risk that usually accompanies business success. It shows up in many forms. The red signs are falling quality of services, poor word-of-mouth marketing, shallow customer support systems, poor reviews on online platforms, falling traction on social media, and more. Some ideal remedies to prevent deteriorating customer orientation are keeping employees up-to-date with the latest training, process improvements, personalisation, maintaining solution-oriented customer support and service systems, and keeping communications meaningful.

For enquiries on retail business solutions or to speak to one of our expert retail consultants, please drop us a message and we will reach out to you.


What is risk management in retail?

Risks are those potential outcomes or situations that can cause loss – financial or non-financial to individuals or organisations. When risks become a reality, they can disrupt routine operations and even threaten survival. That is why managing risks is important. Various types of risk exposure in the retail business are:

  •         Planning and strategic risks (e.g. declining footfall and sales, inability to counter competition)
  •         Operational risks (e.g. over & under stocking, store safety and security, poor quality output)
  •         Financial risks (e.g. working capital crisis due to poor retail business planning)
  •         Supply/value chain risks (e.g. poor performance of suppliers)
  •         Technological risks (e.g. technology obsolescence)
  •         Legal and compliance risks (e.g. inability to meet contract/statutory requirements)

By having a proper risk management framework, potential business risks can be identified in advance and appropriate actions/action plans can be put into place.

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Author Bio

 Nikhil Agarwal

Nikhil Agarwal

Chief Growth Officer

Nikhil is a calm and composed individual who has a master’s degree in international business and finance from the United Kingdom. Nikhil Agarwal has worked with 300+ retail e-commerce brands and companies from various sectors, since 2012, to define their growth strategy and achieve operational excellence. Nikhil & his team have remarkable success stories of helping brands achieve 10X growth.

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    The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

    In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

    Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

    Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

    YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.


    No matter how good your product is, the customer would know only if it looks good.

    Photography includes the following steps:

    • Cataloguing your products
    • Cataloguing your images
    • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
    • Choose the right camera & lens (You may also outsource the photography to a third party agency)


    Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

    Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

    These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

    Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

    This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.


    Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

    YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

    IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

    This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

    Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.


    • How many cities or countries you wish to sell in?
    • Where should your Warehouse be located?
    • Should you have one warehouse in each country or city?
    • Should you be having your own delivery team in your base city?
    • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
    • How should I manage the logistics if my goods are coming from different countries?
    • How should the goods be stored and barcoded?
    • How much space do I require for warehouse?
    • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.


    At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

    We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

    Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.


    This Step involves 03 distinct parts:

    Part 1: Choosing the right Platform:

    From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

    Part 2: UX Designing:

    “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

    UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

    “As per statistics, 68% of the customers abandon the carts before payment”

    An interesting UX ensures the customer sticks on to the website for a longer time.

    Part 3: UI Designing:

    UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

    A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

    The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

    If User experience is the bare bone, user interface wraps it up with an attractive cape.

    At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!


    This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

    In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

    Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

    Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

    Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

    Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

    Production Sample is made before the production which is the replica of what is going to be finally produced.

    Once you are through with all this, you are good to go ahead & get your goods manufactured.


    Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

    Product Designing / Sourcing can be done in several ways, as follows:

    • In-house Design Team
    • Freelance Designers
    • Outsourced Design Team
    • Ready Product Sourcing (From Manufacturer or Wholesaler)

    At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

    These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

    If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

    Sourcing includes fabric, trims, lining & all the raw material required to build the garment.


    Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

    Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

    It is an integral part to attract the target audience.


    Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

    SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

    At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.


    Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

    CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

    CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

    At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.


    Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

    Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

    Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

    YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.


    Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.