Brexit. A big term which has been haunting the UK in the past couple of years, escalating into political, economic and social debates on whether it was right or wrong to leave the EU. All politics aside, although, it’s important to understand that Brexit will most likely have an impact on any form of trade inside and outside the UK, especially within the whole retailing segment. Let’s analyse the possible impacts and let’s elaborate a thought on whether if Brexit will have a positive or negative impact on the retail sector overall.
What We Know So Far
Brexit is still pretty much a hypothetical matter, as the only thing (as of today) we know is that, depending on the upcoming December’s general elections, there could still be a chance for things to change towards a referendum, a no-deal scenario (due to January 2020) or (best case scenario) a proper deal Brexit. This is extremely important to state as it gives us a confirmation of the fact that all the data we know so far is pure speculation.
For now, it has been pointed out how, in case of a no-deal scenario, there could be a net 5% taxes increase for imports, which is a big reason why the entire scaremongering in regards to Brexit has been dominating the retail sphere. Although this could be realistic, in case of a no-deal, it’s important to understand how this will heavily depend on the suppliers. This also heavily applies on real estate-related sectors like commercial property management, for example.
One big aspect of retailing which is sometimes underestimated is its online counterparts. In 2017,18 and 19 over 60% of UK businesses approached some form of online strategy to increase their revenues, from small companies to enterprise-ready businesses. GDPR, being an EU-imposed law, has been limiting the usages of data science and data-oriented strategies for marketing (whether if PR or digital) with rules which are sometimes too strict (to avoid what happened with the Cambridge Analytica scandal). If the UK manages to exit the EU properly, there’s a concrete chance that GDPR could be bypassed or, in the worst-case scenario, limited, giving power to all the retailers which want to use data-driven marketing strategies to increase their revenues.
As of today, the GBP has been suffering a lot of fluctuations due to Brexit delays and confused news but the currency’s value is, independently from a deal or no-deal scenario, very likely to drop once the UK will step aside from the EU. Currencies’ power on the market is something very important to understand in case of a no-deal Brexit, as it will most likely change the buying and selling power many UK-based retailers have in regards to materials, building work and delivery/stock management. Although this is, unfortunately, not traceable as of today (and probably won’t be until Brexit actually happens), we can safely expect a drop within the 20/25% region comparing GBP’s value with the Euro.
Don’t Be Scared
As pointed before, Brexit as a topic could be a source of high-level scaremongering. It’s important, at this stage, to understand that, independently from a deal or no-deal scenario, there will be a transition period which will give retailers, business owners and, most importantly, citizens time to understand and adapt to the new rules. To sum this up, retailers shouldn’t be “that” scared about Brexit and should wait until the government announces measures and a detailed plan for the future.