Retailers need strong controls in these hard times

Retailers rapidly responded to the pandemic by digitally transforming and need to make sure internal control environments have evolved at the same pace.

Retailers are facing steep energy prices, supply chain issues and rising inflation, alongside the three significant events that have turned the world on its head: Brexit, the pandemic and now the Russian war against Ukraine. These significant challenges and events require retailers to re-think their processes and strategies on how they do business.

Retailers could be forgiven for thinking that things were looking up again. After a rocky two years, January saw sales improve and retail seemed to be making a comeback as the pandemic pressures eased. But the cost-of-living crisis and war in Ukraine has rocked consumer confidence and cast a shadow over the sector.

With new uncertainties mounting, organisations need to continually review their strategies once again. This follows the massive transformation to business processes and practices made to cope with the impact of the pandemic.

Experience shows us that emerging risks need to be discussed and brought into the boardroom on an ongoing basis. This is no longer a formal annual exercise – it requires constant horizon scanning. The retail industry has responded quickly, and now is the right time for organisations to make sure they have designed and embedded effective internal controls in their new processes to ensure resilience and efficiency whilst mitigating future risks to their strategies.

Ultimately, having an effective internal control environment leads to fewer surprises (early warning systems), better decisions and enhanced trust and confidence for investors and stakeholders. The stronger controls are designed and embedded, the easier it is to shift focus to new risk areas. A well-controlled business allows for focus on strategy, achieving goals and increasing profitability.

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