As March 29 draws closer and a no-deal Brexit seems increasingly likely, retailers are preparing themselves regardless of the outcome. But just how consequential would a deal or no-deal Brexit be for retailers? And if another Brexit-fuelled crash of the pound sterling occurs, how would it affect the industry?
Since the UK voted in favour, albeit with a slim 52 per cent majority, of leaving the EU back in June 2016, Brexit has been on people’s mind’s a lot. So much so that consumer confidence has dwindled, and prices have gone up as the value of the sterling tumbled.
Despite the government’s efforts to negotiate with the EU on a trade deal that it wants, the end result still seems unclear. Many businesses are now preparing themselves for a potential no-deal scenario as the March 29 deadline for the UK’s divorce from the mainland draws closer.
The aim is to have an agreed deal on the table with the EU by that date, which will lay out the exact terms under which the UK will depart from the union. Whether a deal is reached or not, it might have consequences for retailers.
“Achieving a last-minute deal looks increasingly unlikely, so retailers need to prepare for the risks posed by a no-deal scenario,” said Danny Sperrin, business manager at management consulting group Newton.
“Tariffs of five per cent or more on imported goods, poor product availability, wastage and a labour shortfall, which all pose a real threat to profit margins and top line sales, should be top of the agenda.”
He added: “The impact of this will be exacerbated by the uncertainty felt by consumers, prompting them to panic-buy in the run up to March 29.
“Retailers can take practical steps to mitigate this, by adopting a ‘peak mindset’ and collaborating with their supply base.”
One factor of a no-deal Brexit is the inflation it could potentially cause. In a report published this week, the British Retail Consortium and Northern Ireland Retail Consortium warned the government as well as the general public that a no-deal would have “devastating consequences”.
