Retail is a multi-regulated industry. There are legal compliance requirements that touch nearly all areas of retail operations from employment, environmental health and safety, product and food safety, and others that apply to more specialized retail operations, such as consumer finance and retail health and wellness/pharmacy. Retailers also support over 42 million Americans jobs and have global supply chains and national distribution networks. Because of this, retail operates in an environment of regulation at all levels of government- local, state and federal. These factors combine to make an organized response to ethics and compliance risks imperative.
The retail industry is rising to this challenge. Survey respondents indicated their companies' unanimous support for maintaining robust risk and compliance programs with nearly one-third of responding companies identifying their programs as "modernized" or mature enough to operate in synergy with business units, make use of advanced analytics, and articulate their value through a measurable return on investment.
While the results indicate there is still room for retailers' compliance programs to grow and mature, it is encouraging to see the integration and acceptance of compliance throughout retailers' core business. Nearly half (46 percent) of respondents say that their company's compliance team is viewed as a partner to business units company-wide, hinting at how compliance might promote stability and competitive differentiation in times of change.
Nearly two thirds of respondents say their company performs an enterprise-wide compliance risk assessment. Three-quarters of those whose company performs such risk assessments indicate that they are done at least once a year and almost 60 percent of respondents also indicate that their organization measures compliance program effectiveness. These results show that not only are retailers focusing on moving their compliance programs from being reactive to proactive, but they are also taking measures to hold their programs accountable.
Looking to the future, nearly 40 percent of respondents expect to increase their compliance program budgets in 2018 and beyond. Retailers must continue to meet a changing regulatory environment and increased consumer demand with a structured, pragmatic approach to ethics and compliance. Budgeting wisely and increasing focus on integration can help reinforce and activate compliance throughout the company, help the business collaborate more effectively, make better decisions, and take smarter risks.
Kathleen McGuigan, Senior Vice President and Deputy General Counsel for the Retail Industry Leaders Association and Kevin Lane, Principal, Deloitte Risk and Financial Advisory, Deloitte & Touche LLP
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