Retail sector reacts to Brexit

The British Retail Consortium is urging the Government to move “quickly” to explain the process of disengagement from the European Union, as it states, without clarity, retailers will “suffer from a prolonged period of uncertainty”.

The top retail priority the British Retail Consortium said of the Brexit negotiations will be the preservation of single market benefits, and that, “keeping the cost of goods down for consumers and providing certainty for businesses must be at the heart of the Government's plans for life outside of the EU,” said chief executive Helen Dickinson.

The statement continued as a warning to retailers adding that they should be prepared for “significant swings,” particularly in the exchange rate and consumer confidence, adding that a prolonged fall in the value of the pound will impact import costs and ultimately consumer prices.

The British Retail Consortium states that retailers' top priority in the short term will be to ensure the continued ease and minimum additional costs of importing EU goods into the UK. While urging the Government to ensure that trade benefits of the single market, such as the absence of customs duties, are replicated in the UK's new relationship with the EU.

The retail trade association, which represents 80 percent of retail trade in the UK by turnover, from small, independently owned stores, to big chain stores and department stores, added that the process of leaving the EU would take a couple of years and during which time the UK remains a member and EU rules over free movement will continue to apply. However, it stressed to its members that they should continue to focus on serving and delivering for their customers day in, day out in a highly competitive market as they do today.

“In the slightly longer term, it's important for the Government to explain how it will handle legislation that was previously the responsibility of the EU. This is likely to be a time-consuming and resource-intensive process affecting a wide range of stakeholders,” added the British Retail Consortium. “We are sure the Government will put in place a clear and effective process for consulting interested parties as it reviews these regulations. The British public has opted to leave the EU and it is now up to the Government in conjunction with our EU neighbours to make the most of that decision.”

Retail industry reacts to Britain’s vote to leave theEuropean Union

The British Council of Shopping Centres, which represents more than 450 retail businesses including a large number of the FTSE 250, also stated that the outcome of the EU referendum was already having a “significant impact” on the retail and retail property markets, but reiterated the Prime Minister by stressing that the fundamentals of the British economy is strong, and that its members “must be careful not to talk down our sector, or over inflate the economic, social and political challenges ahead”.

Edward Cooke, acting chief executive at the British Council of Shopping Centres, added: “The prospects for the wider economy and consumer confidence will now depend in part on negotiations over the UK’s new status.

“We hope those negotiations happen quickly and effectively to create the right conditions for the retail sector to continue to deliver employment opportunities and invest in UK towns and cities, contributing to local economies and communities.”

While KPMG’s head of retail David McCorquodale stated that the challenge ahead is understanding how the negotiations with the EU will pan out, adding: “We need to see how politicians negotiate trade treaties. Initially, the currency movements are the biggest concern. Not everyone in retail is hedged perfectly and we are doing a lot of buying in other currencies.

“Then the biggest factor going forward is what consumer confidence is going to be like. It has been fragile since 2008. The question is when will it pick up.”

Cushman and Wakefield, EMEA chief executive, John Forrester said: “A period of further uncertainty is unavoidable as businesses, the financial markets and the political establishment in the UK, Europe and globally come to terms with what this means.

“Clearly the impact of this decision will be felt beyond the UK’s shores as the UK is the EU’s third-largest market by population. We are therefore entering a period of unprecedented change as markets and sectors adapt. What is clear is that in any scenario there will always be opportunities and those will become clear in the weeks and months ahead.”

Madeleine Thomson, retail and consumer lead at PwC, added that a survey of retail chief executives conducted by the firm ahead of the vote was more upbeat on growth prospects, with 43 percent of respondents saying that their growth plans were not at all dependent on staying in the EU. Adding that currency impacts causing prices to rise or margins to be squeezed and the impact on imports from the EU were highlighted as their top concerns.

“Whilst we may see a short-term impact, most businesses will have a contingency plan in place and there is no reason why long term success should be impacted by the referendum outcome,” Thomson added.

Verdict Retail's Patrick O'Brien stated: "While retailers may have currency hedges and contract terms already in place with suppliers which will delay the impact on shop prices, they will not be able to hold prices for long. Following the exit from the single market, there could be costly tariffs in place should the UK government fail to negotiate beneficial trade agreements, which will put further upward pressure on prices.

“Retailers must encourage consumers to spend now ahead of such rises, but that will be hard in the circumstances. The UK population has become well used to austerity since the recession, so retailers will not see a huge change in consumer behaviour, but a further continuation of the challenges they have been facing over the past few years.”

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