British retail sales to the EU are tanking: Why marketplaces present the crucial lifeline for brands and retailers to tap back into the market

According to new research Tradebyte conducted in partnership with Retail Economics, British retail sales to the EU are tanking. The latest stats reveal that the value of non-food exports to the European Union has dropped almost a fifth (18%) since 2019, and retail sales have plummeted a hefty 5.9 billion pounds overall.

Amongst categories, clothing and footwear has seen the steepest decline, dropping an alarming 64%. This is despite a flourishing European e-commerce market. So why is this happening and what can British brands and retailers do about it?

Two major trigger events stand out during this period, the first being Brexit and the UK’s decision to leave the EU; and the second, the COVID-19 pandemic. While COVID-19 undoubtedly had a significant impact on exporters, it’s the former and its associated complexities that continue to disrupt UK export opportunities.

The post-Brexit landscape has presented significant challenges to the UK’s non-food export environment. These challenges include escalated logistics costs, complications in registering an EU entity for trading, and increased delays in an already competitive market characterised by tight profit margins and the need for rapid response to the latest trends.

Disproportionate impact across retail categories

Interestingly, these impacts are being felt unevenly across retail categories, with clothing and footwear faring the worst. Exports in this category have dramatically declined, falling from 7.4 billion pounds in 2019 to just 2.7 billion pounds in 2023.

This sharp drop has put considerable pressure on brands and retailers lacking the necessary expertise, resources, or financial capacity to navigate the complexities of the new regulatory landscape.

The new trading relationship with the European Union has shifted operations. Apparel pre-Brexit was a top three exporter for non-food retail, but now Health & Beauty, Electricals, and DIY & Gardening make up three quarters of UK retail exports to the EU. Health & Beauty, and DIY & Gardening are the only two categories to have seen a marginal increase in export values since 2019.

The marketplace lifeline

Undoubtedly, the seismic shift in the United Kingdom’s trade relationship with the European Union hit British brands and retailers hard. The double strike of Brexit and the pandemic has significantly disrupted UK exporters who now must navigate increased friction and cost. For these exporters, marketplaces have emerged as a lifeline to tap into the EU market in a way that is low-risk, yet offers the opportunity to scale as retailers look to expand into new territories.

Amidst export challenges, online opportunities across Europe have accelerated since the pandemic, with marketplaces emerging as pivotal platforms for UK brands and retailers to mitigate the impact of Brexit.

Online marketplaces, which now account for over two-fifths of the EU's 322.6 billion pounds annual online non-food sales, offer a streamlined path to access affluent and younger consumer demographics. The concentration of sales among the largest EU markets means the top 10 online markets account for the lion’s share of non-food online sales, with marketplace sales alone accounting for at least 133 billion pounds of EU e-commerce.

However, international retail is still a complicated space to play in. From language barriers to taxation and customs issues to warehousing and fulfilment, there are a range of obstacles to overcome. In today’s marketplace landscape, access to relevant customer data, an intuitive understanding of the market, relevant experience and knowledge of current trends and an effective fulfilment strategy will be critical to success.