One in four (25%) firms in the UK retail and distribution sector are considering cutting costs to cater for the rising prices of raw materials, according to research carried out by leading commercial insurer NIG.

The research, which surveyed businesses across the UK with annual turnovers from £50k to £20m+, found that nearly one in five (19%) firms in the retail and distribution sector – equivalent to 93,000 businesses – admit that they are considering changing business processes and/ or products to accommodate the high cost of raw materials.

Around one in ten (8%) firms in the sector said they were concerned they were underinsured against theft or damage given rises in the costs of raw materials.  Over one in ten (12%) reported they had suffered a theft of stock over the past 24 months while 3% – equivalent to 15,000 businesses – said they had been hit by a theft of raw materials.

Martin Hall, Director of Commercial Underwriting at NIG, said: "The UK retail and distribution sector is facing a number of challenges and the rising cost of raw materials has clearly become a key concern for many retailers and similar businesses.

“While many are taking steps to cater for these challenges, it is vital that businesses assess the risks they face and make sure they are not leaving themselves exposed to unnecessary risks and threats.  If companies have changed processes, products or moved property, for instance, they need to let their insurance broker knows as this could impact their cover.”

The research from NIG found that nearly a quarter (23%) of firms in the sector said they had never had a professional risk assessment carried out on their business.  Of those that had a risk assessment conducted, 18% said that they had not had one for more than 12 months.

Martin Hall at NIG said: “I would urge businesses to pro-actively contact their broker to discuss a risk assessment and their cover in general.  Insurance brokers can provide important advice and discuss practical steps that businesses can take to mitigate the risks they face.  The aim of a risk assessment is to determine what measures, if any, are required to safeguard the health, safety and welfare of employees and other third parties, who may be exposed to risks arising from businesses or business activities.  It should be seen as a fundamental part of standard business practice.”