6 Key Compliance Risks for Retailers

Posted by

Matt Green

on 28 Feb 2024

Retailers face a complex web of regulations as well as evolving consumer expectations. They risk both non-compliance fines and the impact of bad PR.

compliance for small retailers

Specific retailer risks vary depending on their type, size, and location. However, all retailers must stay updated on regulations and compliance practices changes.

6 Key compliance risks for retailers

1. Data Protection

Customer data breaches: Leaking sensitive customer information like payment details or personal data can lead to hefty fines, lawsuits, and reputational damage. Compliance with data privacy regulations like GDPR and PCI is paramount.

Employee data handling: Improperly handling employee data, including payroll and performance reviews, can also breach regulations and attract penalties.

Cybersecurity threats: Protecting customer data and sensitive information from cyberattacks requires robust cybersecurity measures and employee training.

More on Small Business GDPR

2. Product Safety & Quality

Defective products: Selling unsafe or faulty products can result in injuries, lawsuits, and product recalls, damaging brand reputation and incurring financial losses. Strict adherence to product safety regulations and quality control measures is essential.

Fraudulent or counterfeit products: Selling counterfeit goods or failing to prevent their presence within your supply chain can lead to legal troubles and erode consumer trust.

3. Employment & Equality

Incorrectly calculating employee wages and overtime pay or failing to provide breaks can lead to hefty fines and employee lawsuits.

Maintaining proper payroll records and adhering to labour laws is crucial, especially the Working Time Regulations 1998 (WTR).

The WTR details conditions relating to weekly working time, rest entitlements and annual leave in the UK. Staff can agree to work more than 48 hours a week (opting out) but can't be forced and can also later give notice that they want to cancel their opt-out.

The WTR currently provide employees with the following basic rights and protections:

  • A limit of an average of 48 hours a week over 17 weeks, which a worker can be required to work.
  • A limit of an average of 8 hours work in 24 hours which night workers can work.
  • A right to 11 hours of rest a day.
  • A right to a day off each week.
  • A right to an in-work rest break if the working day is longer than 6 hours.
  • A right to 28 days of paid leave for full-time workers per year (including public holidays).

New regulations in 2023 clarified that although employers are not required to keep records of the daily working hours of each worker, they should maintain records sufficient to show compliance.

Discrimination and harassment: Discriminatory hiring practices or allowing a culture of harassment within the workplace can result in legal action and damage employee morale.

Free Workplace Harassment Training Presentation

4. Financial Crime

Tax evasion and fraud: Improperly reporting income or expenses can lead to financial penalties and reputational damage. Maintaining accurate financial records and adhering to tax regulations is essential.

Money laundering: As retailers deal with larger volumes of cash than many other businesses, they may be more susceptible to money laundering. Failing to implement proper anti-money laundering (AML) procedures can put you at risk of being used for illegal activities and attract regulatory scrutiny.

AML Checks Training Aid

5. Health & Safety

Unlike many other businesses, health and safety risks affect staff, suppliers and customers. As a consumer-facing industry, this risk is amplified through both the behaviour of suppliers and shoppers as well as the potential impact upon them.

Slip, trips and falls: Maintaining safe and clean store environments is crucial to avoid customer injuries and potential lawsuits. Regular inspections and proper maintenance are key.

Fire safety and building codes: Failure to comply with fire safety regulations and building codes can lead to fines and potential closures.

Free Workplace  Accidents Training Presentation

6. Modern Slavery

Third-party vendor risks: Ensuring your vendors comply with relevant regulations and ethical practices is important to mitigate risk throughout your supply chain.

From a consumer perspective, you need to be able to reassure consumers that your products are ethically sourced.


Retail companies can operate more confidently, protect their reputation, and avoid costly penalties and legal troubles by proactively focusing on key compliance risks and introducing effective policies, processes, training, and reporting.

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