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Black Friday, Cyber Monday Bring Out the Risk Grinch

Posted on 28 November 2011

The rush is the risk on Black Friday and Cyber Monday in the eyes of a retail insurance and risk expert who previously worked in retail for 22 years.

Kelly Brown of Zurich North America doesn’t go so far as to describe the holiday time as a zombie apocalypse, but he and others in the insurance industry with retailers for clients have growing fears of ravenous gift-seeking crowds on Black Friday, the day after Thanksgiving, seeking coveted items at a time when there appear to be questions about retailers’ inventory.

To start with, supply chain issues in exporting countries could lead to fewer items being available. Also, retailers themselves may be cutting back on excess supply. If not properly managed, the situation could invite more of that holiday madness.

“If the items advertised are not available, it definitely could be a problem,” Brown said.

Several indicators may point to reduced supply over the holidays, most notably retailers cutting back on their stock to remain conservative and in preparation for a holiday shopping season that’s just expected to be average.

The twin ports of Los Angeles in Long Beach, where the lion’s share of goods headed to western U.S. retailers and distributors arrive from foreign countries, recently reported disappointed cargo volumes for October, when the number of containers coming into the third busiest port complex in the nation dropped an estimated 20 percent year-over-year. October is typically a strong month for cargo volume due to retailers stocking up for the holidays.

Despite signs that consumer demand may be rebounding across the nation, retailers appear to have taken a cautious approach for the upcoming holiday season, according to retail industry watchers at the port.