Pivoting? You should probably call your insurance broker
COO & Co-Founder
COO & Co-Founder
It’s been a tough year for retail. Just ask J.C. Penny, Macy’s or Target. As e-commerce continues to overtake retail (thanks Amazon), traditional retailers need to employ different strategies to satisfy customers. In other words, it’s time to start pivoting.
Startups are all too familiar with pivoting, and many startups do so at least once. Sounds simple enough? Not too fast. Remember, your insurance policy was crafted to cover your company’s specific operations. Changing those operations might create new exposures that are not covered by your current policy.
Take Nordstrom, for example. They seem to be getting the hint that retail needs to take a different approach, and fast. That’s why they announced that they will be opening a new store to give customers a unique shopping experience.
How different are we talking? Firstly, the store will not carry clothes. The store aims to give its shoppers experiences, not just the convenience of purchasing a product.
In a radical shift away from a typical retail experience, the new, smaller store provides opportunities, not just shopping. Customers can now sit down and enjoy a coffee, beer or wine, receive a manicure or have their clothes tailored. Nordstrom will provide stylists who can pick up clothes from other Nordstrom locations for those actually looking to purchase clothes. This change in strategy does reduce some of Nordstrom exposure, but it also brings new exposures.
A retail giant like Nordstrom probably has general liability insurance for each of their stores. Since this space is smaller, they might expect to see lower insurance costs on their policy. However, most general liability policies exclude liquor liability so Nordstrom may need a totally new policy to cover this exposure.
Their manicurists and seamstresses will need errors & omissions policies tailored to their needs (pun intended). Shuttling stylists from one Nordstrom store to the next to get that exact pair of loafers? They’ll have new exposures that should now be addressed by hired/non-owned auto or commercial auto insurance.
What if Nordstrom’s investors push back, either now or down the road, if this strategy proves unprofitable? That’s the type of risk that would likely be addressed by a directors & officers insurance policy.
If you’re considering pivoting, or simply moving fast and breaking things like most of our clients, you need the right partner by your side to help you manage your risk at every turn. That’s where Founder Shield comes in.
Create an account here to get a free quote and see how we can help!
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