The dissolution of borders has been one of the biggest stories in retail over the past two decades. Across Europe, the barriers of international trade have been demolished as payment, tax and logistics fall to the onslaught of technological progress. Global brands have shouldered their way onto our phones and into our browsers. And British brands have benefited more than most, leveraging their experience in a tech-savvy, connected nation to easily sell their wares in new territories. So it came as a shock to many recently that over half the British public chose to rebuild their borders.
The immediate impact has been dramatic: Currency collapse, a stock market in freefall and political turmoil. But what is the picture for retail in the medium to long term?
For now, the challenges will be currency and uncertaincy. A heavily depressed pound reframes the economics of retail across all categories, with domestic producers benefiting and importers suffering, particularly against the dollar. Investment decisions are likely to be delayed as leaders and financiers seek more reliable returns. Disinvestments may be accelerated with the chaos providing cover.
As negotiations are formalised and the picture becomes clearer, the currency will likely stabilise. Then the focus turns to taxes, tariffs, travel and regulation. Will the UK remain part of the single market? Will free movement be maintained? Will UK quality standards remain aligned with European partners?
There are, of course, many uncertainties. However, this we know to be true:
- For a sector that is rapidly changing and a new post-Brexit world, retailers need to accelerate plans for this new era, not sit on their hands.
- Talent, already an issue, particularly in digital skills, becomes an even greater challenge if free movement is restricted. That being the case, retailers need to reassure their staff about their future, because worried and distracted staff will directly impact customers experience.
- Retailers need to be rational – and patient. Trade negotiations will take several years to work through. The biggest challenges they will face in the short term will be sterling’s weakness and consumer sentiment.
- Retailers need to maintain consumer confidence and remain focused on delivering great customer experience across all channels.
This could be an opportunity for British retailers that source from Britain to benefit from sterling’s weakness. Manufacturing in Britain has dwindled, but buying British could be a fashionable way out, heralding a rise in the popularity of the phrase ‘Made in Britain.’
No one knows exactly what the future will hold, but an inherently international retail sector is perhaps best placed to address the challenges of Brexit. The UK market remains large and attractive to global brands, and UK brands are unlikely to take this as a reason to retrench.
The most important thing now is that we accept the result, like it or not, and start debating how industry can move forward successfully within this new reality, in a pragmatic way.