Page 135 - Risk Report 2024

7. Energy 8. Logistics

Energy issues impact operations, points of sale, security, Hijackings, crime syndicates, deteriorating roads, and safety
lighting, temperature-controlled storage, changing consumer threats impact supply chains. Global issues impact the import
behaviour, and ultimately increase cost, compounding socio- and export of goods on which the sector depends. Port delays
economic risks for historically disadvantaged communities. This and congestion, rising shipping costs and delays impact raw
includes the costs of maintenance of generators, diesel costs material availability and products into stores, with seasonal
(further exacerbated by rising diesel costs), equipment failures, product delays resulting in unrecoverable financial loss.
and increased insurance claims due to loss of fresh produce. Mitigation includes investment in local suppliers. Alternative
Opportunities include modernising energy infrastructure to transport solutions are extremely limited, and require improved
produce green solutions, with larger scale distribution centres logistics planning and execution to retain, and where possible
developing self-sufficient solar capacity. Food security is a reduce cost (or minimise cost increases). Opportunities include
key risk as a direct consequence of a potential national grid modernisation and utilising technology to optimise the flow of
failure and requires a deliberate and coordinated plan. Energy goods.
back-up or standard supply replacement solutions come at
a high cost which cannot be transferred in full to consumers,
eroding margins and often lead to the demise of low turnover
retailers. Retailers refrain from investment in national grid
failure recovery as the cost is economically not viable, and
the risk should be transferred to Government. Mitigating the
risk of frequent energy supply disruptions should however be
managed optimally at a level that enables profitable business
continuity.

9. Food Security 10. Climate Change
Significant inflation in the cost of staple goods in recent years Climate change and extreme weather events hamper production,
drives other socio-economic risks. Retailers partner with trading conditions, and sales amongst other operational
food suppliers and insurers to promote long-term financial challenges, with more informed investors and society
viability of the value chain. Availability of quality raw materials, demanding transparency on ESG and SDGs across the retail value
increasing risk of diseases, operational costs of production, chain. Mitigation includes sustainability initiatives, regulatory
and infrastructure failures all impact food production and compliance, communication, appropriate procurement, stock
availability. Food security is also impacted by rising socio- management, and supply chain optimisation. Decarbonisation
political risk (access and availability challenges due to riots, and just transition affect business viability and sustainability
logistics disruptions). The sector invests heavily against with continuous but realistic improvement expectations
disruptions and to ensure that products meet safety and remaining high priority.
hygiene requirements. Lack of food increases the risk of theft,
shrinkage, and overall poor customer service delivery, which is
alleviated by proper working conditions and consistent work
environments which enable staff to maintain decent living
standards.

11. Technology 12. Skills

The sector depends on technology, which brings challenges and Retail human resources are a cornerstone of the economy, and
opportunities for competitive advantage to the value chain. their wellbeing addresses numerous socio-economic risks. An
Storing critical consumer data and many points of sale leave the unengaged and ineffective workforce is the cause of the most
sector vulnerable to cyber risk, resulting in compromised data, underestimated risk in the SA economy. Retailers must attract
unauthorised disclosure, operational disruptions, financial and retain skilled resources, from artisans working with food
losses and reputational damage. Evolving consumer behaviour products, to experts in supply chain and financial management
requires accelerated online capabilities and a seamless with the right attitudes and aptitudes. Securing skilled workers
customer experience across multiple channels. The sector in rapidly globalised economy, exacerbated by poor education
has accelerated digital/data analytics, AI capabilities, and outcomes, and the ease of ‘semigration’. The sector invests
technology architecture support to meet customer demands. heavily to train and upskill resources, provide positive work
Mitigation of the risk requires prevention and detection environments, foster learning and innovation, emphasise
measures at manageable cost with appropriate insurance product knowledge, and customer facing service delivery skills,
coverage to fund recovery and damages. Leveraging technology to increase end user satisfaction (which increases sales and
opportunities requires research and investment to capitalise on profitability).
attracting and serving customers better and beat competitors.