Risks of Operating a Retail Store

If you’re interested in owning your own business, a retail store can be a great investment and provide steady income with the right preparations. While you can earn a good living and run a successful store, you should also be aware of the risks you are exposed to. Retail stores have risks like shoplifting, vandalism, liabilities, and unforeseen events that can do damage to your store and your business assets. By educating yourself on the risks, you can better prepare for them.


Risks of Operating a Retail Store




One of the biggest risks for retail stores is the risk of crimes such as shoplifting, theft, embezzlement, or damage to the store and merchandise. Even if you have made actions to protect it such as installing surveillance equipment and hiring a security guard, a variety of crimes can occur in your store,  For instance, you are at risk of shoplifting from customers and people visiting your store and you are at risk of an employee embezzling money from you or taking cash right out of the register. These crimes can lead to a big loss in money for your company’s financial statements.


Economic Decline


When the economy is suffering, retail stores suffer right along with it. As people are struggling to pay their rent and bills with a declining economy, they are shopping less. There isn’t always a long warning when this occurs, so you might not have planned for it ahead of time. Even when your business is successful, you should always make the necessary steps to ensure your business doesn’t fail as a result of financial hardship. You never know when there is going to be an economic crisis and your business is going to suffer as a result.


Current Trends and Preferences


Another risk for retail stores is not being able to keep up with current trends. If the merchandise you are selling is outdated or no longer relevant, it’s not going to sell and you will lose the money you spent on it. That doesn’t even mention the inconvenience of getting rid of old merchandise that didn’t sell and purchasing merchandise that goes along with the current preferences of your customers. You have to keep up with all the current tastes and trends and be sure you are fully stocked. This takes constant market research and proper inventory strategies.


Issues with Supply Chains


The supply chains and warehouses that you get your merchandise could have any number of issues. When this occurs, it directly affects your business because you’re unable to get the newest stock of merchandise which might turn away customers. This is also true if you run an online retail store because warehouses not shipping items could cost you in possible returns, complaints from customers, and people who don’t want to shop with you again if their orders take too long to arrive.




If a customer trips over a box laying by the entryway or harms themselves on a clothing rack, you can be sued for damages. These and other types of liabilities will cost you a significant loss in business assets as well as your reputation. General liability insurance is one of the best protections available for this type of risk.


If you plan to own and operate a retail store, you can find many benefits to choosing this type of business, but there are also risks of operating a retail store. This shouldn’t deter you from your business plan, but help you prepare for potential situations that could negatively affect your business.