The impact of Brexit has been mixed, with 51% of retail decision makers surveyed saying that they have seen an impact on sales in the UK since the EU referendum, with most favouring a so-called ‘soft Brexit’, according to new research.
The research findings, from cross-boarder ecommerce specialist Global-e, suggest that the effects of Brexit on UK retail may be less black and white than some commentators anticipated
Although the UK could be just days away from triggering Article 50, over two-thirds (68%) of retailers have yet to start planning for Brexit, according to the survey of 250 British retail decision-makers commissioned by Global-e.
This is despite more than half (51%) of retailers saying that the vote to leave the EU has already impacted UK sales.
Other key findings include:
• 32% of UK retailers that sell internationally have seen increase in online orders from outside the UK
• Over half (51%) of retailers that sell internationally expect cross-border trading to become more complex, when the UK leaves the EU
Global-e found that a fifth (21%) of retailers have seen sales increase in the UK, while 30% have seen sales fall and 47% of retailers have seen no impact at all. Comparatively, almost a third (32%) of UK retailers that sell internationally have seen online orders from outside the UK rise, as international shoppers take advantage of the weakened pound to bag a bargain.
The London-based business commissioned the research to better understand the potential impact of Brexit on the UK retail industry and selling internationally. Global-e found that retailers are overwhelming positive about the future, with three-fifths (62%) of UK retailers surveyed stating that they feel confident or very confident that they can continue to flourish internationally once the government triggers Article 50.
Despite this confidence, almost half (48%) of retailers expect the economy to weaken, making it more expensive to import goods. In turn, 63% of retailers think consumer prices will increase in UK stores. However, with a weakened pound making it less expensive for international shoppers to buy from UK retailers, UK goods could appear more attractive to shoppers around the world.
“As the Brexit bill moves through Parliament, retailers are facing up to the reality of what Britain’s exit from the EU might mean. Although some retailers have revised their plans, our research suggests that most are taking a wait-and-see approach, before considering whether to change course,” said Nir Debbi, co-founder and CMO, at Global-e. “In the months since the EU referendum took place, most retailers have already felt some impact, with many of those that operate internationally seeing an increase in sales from online shoppers worldwide due to the weakened pound and growing trend for cross-border e-commerce.”
Half (51%) of retailers that sell internationally expect the UK’s departure from the EU to make cross-border e-commerce more complex. However, 44% of the retailers who are currently selling to shoppers internationally stated that they are continuing with their existing international operations and 23% are planning to invest more in growing their business outside the UK.
“The UK leaving the EU will likely change the VAT compliance of UK retailers selling to EU and the distance-selling regulations related to duties and taxes. How exactly this will be changed depends on the negotiations, however it is likely to increase the complexity of selling cross border, hence the logistics work and costs. In order to avoid any negative impact on their cross-border sales and the customer experience offered to international clients, UK retailers selling internationally should be ready to react to this as legislation is agreed and be wary of the impact it could have on their EU customers.” Added Nir Debbi.
Other findings uncovered by Global-e’s research include:
• Retailers divided on which ‘Brexit’ is best for business: Almost half (46%) of UK retailers are in favour of a Soft Brexit, with some access to the single market, while over a third (36%) think that a Hard Brexit, with no access to the single market, would be better for UK retailers.
• A ‘Brexodus’ of UK retailers appears unlikely: Despite concerns that businesses may move their headquarters outside the UK, Global-e found that just 16% of UK retailers would consider moving all or part of their business to an EU country to retain access to the single market.
• Retailers expect consumer confidence to be affected: More than two-thirds (71%) of retail decision makers think that consumer confidence will be impacted by Brexit. Three-fifths (63%) of retail decision makers surveyed said they expect prices in UK stores to increase once the government triggers Article 50 and around two-fifths (43%) expect consumers to reduce spending, while 28% predict that spending will increase.
Nir Debbi, added: “Our research suggests that the effects of Brexit on UK retail may be less black and white than some commentators anticipated. While many retailers that sell imported goods to UK shoppers have seen prices rise due to the weakened pound, those that sell to international shoppers on the web appear to be reaping the rewards of cross-border e-commerce, with 32 per cent seeing sales increase. However, relying on currency fluctuations will not be enough for long-term success. To make a success of cross-border e-commerce in Brexit Britain, retailers should review the experience they offer to shoppers in Europe and around the world. With the right preparation, technology and processes in place, retailers can seize new opportunities and tackle any challenges created by Brexit, to drive online sales internationally.”
Global-e is the leading European provider of cross-border solutions for e-commerce retailers. The company enables retailers to provide a fully localised e-commerce offering to customers in more than 200 destinations worldwide. Global-e is working with a growing number of leading retailers, including WoolOvers, Prezzybox, Crabtree and Evelyn, Astley Clarke, Illamasqua, and Griffin Technology.
Total sample size was 250 senior decision makers at retail businesses. Fieldwork was undertaken in February 2017. The survey was carried out online.