The luxury retail sphere is highly competitive, and retailers must constantly innovate and find new ways to stay ahead of the competition. One of the most important components of the high-end shopping experience is the environment, and many luxury retailers refresh their image regularly to better appeal to discerning customers.
Although these remodels can give luxury retailers a competitive edge, they often pose significant risks that could compromise the business’s finances.
Here is a look at how retail insurance can protect your investment in your remodeling efforts and provide greater peace of mind.
Is Remodeling Worth It?
Nowhere is the atmosphere of a physical store more important than in luxury retail, where an immersive brand experience is often one of the main selling points.
The right remodel can reinforce your brand’s identity while helping you showcase big-ticket items in more exciting ways. It also provides an opportunity to incorporate the latest technology into your retail environment.
Perhaps most importantly, remodeling can bring more customers through your doors and increase engagement, which helps with customer retention and overall sales.
The Risks Of Luxury Store Remodels
What risks might you encounter when remodeling your high-end retail space?
Business Interruption
One of the biggest concerns for most retailers before undertaking these projects is the potential for business interruptions. Most remodels will require some form of temporary closure or a reduction in operations. Even closing off one section of the store at a time could result in lost revenue or deter potential customers.
Liability
If customers will be entering the site during construction, liability is a concern. In addition, construction sites come with safety risks for workers and people passing by.
Property Damage
Construction projects naturally carry a risk of damage to your luxury retail store’s existing structure. Expensive fixtures and other decor could also be broken or damaged. There is also the potential for construction projects to damage valuable inventory.
Theft
While the store is undergoing renovations, it may be more vulnerable to theft and vandalism.
Delays
All construction projects are vulnerable to unexpected issues that may make the project take longer or cost more than expected, both of which can impact your bottom line.
What Types Of Retail Insurance Can Be Useful For Luxury Store Remodels?
If you plan to update your luxury store, here are some types of coverage to consider.
Business Interruption Insurance
If you anticipate your store needing to close or operate at a limited capacity at any point during your remodel, business interruption insurance could provide coverage for any lost income and ongoing expenses such as rent or payroll. It may also help with related expenses if you need to relocate temporarily.
Builders’ Risk Insurance
This specialized type of coverage can protect your building, materials, and equipment during construction or renovation.
Professional Liability Insurance
Many luxury retailers work with professionals such as designers and architects when renovating their space. Make sure those you work with have sufficient professional liability coverage, as it can be useful if any errors or omissions in their work cause your business to incur financial losses.
General Liability Insurance
Before you begin a renovation project, ask your insurance agent if you need to increase the coverage on your general liability insurance policy for better protection from property damage or third-party bodily injury claims, as well as the legal expenses associated with any covered incidents.
Commercial Property Insurance
Keep in mind that you may need to revisit your existing property insurance policy and make adjustments that account for any new, high-value equipment or fixtures that you add during the renovation, as well as the greater overall value of your renovated space and any updated security systems you install during your remodel.
The exact combination of policies you will need for maximum protection depends on the specifics of your project, so it is a good idea to work with an insurance agent who can customize a policy to suit your unique needs.
Some factors that need to be considered include the project’s duration and scale and the value of your store’s inventory and fixtures.
If any new special features or technologies will be added to your space during the renovation, these should also drive policy decisions. Finally, your geographical location and the local regulations governing business renovations must also be considered.
Start Protecting Your Investment Today
If you are planning to remodel your luxury store, your first step should be making sure your business will not be vulnerable to unnecessary risks. At John M. Glover Insurance Agency, our team of experienced insurance professionals will work with you to develop a customized retail insurance policy that addresses the specific challenges of renovating luxury retail spaces.
Contact us today to find out how we can help you keep your business protected throughout your remodeling project.
