Insurer warns retailers against over-stocking for Christmas

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RSA: Christmas overstock risk

Leading global insurer RSA is warning UK retailers to check the limits on their business insurance cover as they stock up for the Christmas trading period.

The warning comes as stores get set to capitailse on the busiest time of the retail calendar, and the predicted rush in consumer spend ahead of January’s rise in VAT.

Retail sales are predicted to reach £68.7bn this Christmas, marking a 1.3% increase on 2009*. As well as demand for Christmas goods, the impending increase in VAT from 17.5% to 20% in January 2011 will also drive demand in December, heightening pressure on retailers not to miss out on sales, RSA says.

“This is a key time of year for retailers and there will be massive temptation to pile goods high to meet anticipated demand,” said David Geer global business director at RSA. “But it’s definitely worth checking policies to ensure levels of cover aren’t being exceeded. While policies in general automatically provide cover for increased seasonal stock, many do not and it is easy to be caught out.

“There is an added pressure on retailers across all sectors this year – not only to make the most of the traditional Christmas run-up but also to capture market share from those consumers eager to beat the VAT hike. Retailers must also be confident that the snow and ice predicted to last all month doesn’t impact on their ability to provide goods to their customers.”

*Kelkoo report, November 2010