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SME retailers: Brexit is our biggest challenge

More than a quarter of SME retailers are worried about Brixit and the impact that it will have on their business.

27 percent of SME retailers contacted as part of research by finance solutions provider Duologi said that Brexit posed the biggest threat to them, with 62 percent admitting that they felt unprepared and unclear of what the future of European trading meant.

24 percent of retailers polled also admitted that their biggest challenge was keeping up with digital trends, such as efficient online presence over larger and international competitors.

One in ten of those polled felt bigger players like Amazon could potentially steal customers through greater visibility online.

Michael Bevan, CEO of Duologi, said: “With political uncertainty continuing into the new year, SME retailers are still unclear on how this will affect them and how they can prepare. 

“Despite additional resources being made available ahead of an exit from the European Union (EU), deadline extensions scupper existing plans and safeguards, putting small businesses in a difficult position. The economic uncertainty also fuels further consumer hesitancy when it comes to spending on significant purchases, as they are unclear on what the immediate impact of an EU exit means for them.

“Keeping up with new technology and investing in the latest innovations is also a worry for a large number of businesses, who are restricted by budget and lack of knowledge in the ever-changing area of technology. Larger businesses are also able to outspend smaller competitors and invest in their own unique innovations.”

Home and DIY retailers feared Brexit the most, while fashion, jewellery, sports and leisure retailers all listed keeping up with technology as their biggest challenge in the coming year.

Bevan continued: “However, there are simple measures which can be put in place to safeguard a business that trades frequently with the EU. Alternative POS finance options allow small businesses to move with the times and the demands of the consumer, making existing business models sustainable and even increasing number of purchases and revenue, in the process. POS finance options are quick and easy to implement, even for SME retailers, and can make paying by finance as easy as paying with a card.”

Worryingly, less than half of SME retailers are confident they will be thriving in a decade, as the various business challenges take their toll.

The report by Duologi, Finance: an SME issue, surveyed 500 SMEs across a range of retail sectors about their concerns for the future and their knowledge and understanding of point-of-sale (POS) finance.

To read the report in full, visit: https://www.duologi.com/download-sme

FSB asserts retail ‘no deal’ concerns

Small businesses are in urgent need of more government support to overcome a worrying lack of preparedness for a no-deal Brexit.

That according to new research from the Federation of Small Businesses (FSB). In the first UK-wide small business assessment of no-deal preparedness ahead of 31 October, FSB’s research shows that among those small firms that believe a no-deal scenario will negatively impact them (39%), only one in five (21%) have planned or prepared for anticipated issues. Nearly two thirds (63%) don’t think they are able to plan.

Preparations for a no-deal Brexit have come at a high price, with the average cost for these businesses that have prepared, coming in at around £2,000.

That average cost rises to £3,000 for smaller businesses that export and import. Just under one third (31%) of prepared small businesses have stockpiled ahead of 31 October while 34 per cent report temporarily or permanently reduced profitability.

Just under half (46%) of these firms, along with those that plan to prepare for no-deal over the next few weeks, think that the volatility in Sterling has negatively impacted their business. Almost half (46%) of small businesses, that believe they will be negatively impacted by a no-deal scenario, would welcome some form of financial support.

In response to the findings, FSB National Chairman Mike Cherry renewed calls for the provision of financial assistance such as vouchers worth up to £3,000 to assist with preparing for a potential no-deal scenario, including supporting small firms in reaching new global markets.

Given the number of small businesses unable to take specific actions to prepare, he also called for wide-reaching measures in an early budget to boost small business cash flow.

These include a temporary reduction in VAT, an uprating of the employment allowance, an expansion of HMRC time to pay arrangements and extending the two year ‘retailers’ business rates discount of 33 per cent, to a wider range of smaller businesses.

Cherry said: “As the risk of a chaotic no-deal Brexit on 31 October remains alive and kicking, it is worrying that many small firms have either not prepared or are finding that they can’t prepare.

“Ongoing uncertainty is to blame for preparations hitting the skids with the picture still not clear as to how the UK will leave the EU on 31 October. Until we get clarity, small firms must prepare for the cliff edge where possible, and make preparations for a no-deal Brexit.

“Preparing for this outcome is coming at a high price though with small firms being hit by an unstable pound and having to shell out money on a potential outcome that has been highly disruptive, remains uncertain and is unwanted. Government must use what little time is left before 31 October to provide small firms with the support they need to navigate the uncharted and turbulent waters of a no-deal Brexit.

“Raising awareness is important, but not enough. The Government must also turn to meaningful financial support. This is desperately needed and would certainly provide a much needed shot in the arm for those firms that have already spent money preparing. For those firms that can’t prepare, we need broader support including cutting VAT and National Insurance, uprating the £3,000 employment allowance and extending the two year ‘retailers’ business rates discount of 33 per cent, to a wider range of smaller businesses.”

High-Street

The future of UK retail – Brexit and beyond

By Tejas Dave, Founder and CEO of eBusiness Guru and Avasam

It’s tough out there for retailers right now. Brexit is causing all kinds of concerns – just this week we heard of Domino’s spending £7 million to stockpile ingredients.

Whether you’re a leaver or a remainer, just the uncertainty is causing havoc with spending. In July, average retail sales to July rose by just 0.5% – and that’s a new record low.

Brexit aside, it’s still tough. UK spending growth is at a low, and companies are entering administration regularly – more than we expected possible. Even household names we might expect to be doing well are demanding reductions on their rent. Even Primark, which continues to thrive, is demanding rent reductions – though this is in response to those with CVAs. 

Many media outlets are decrying eCommerce for the decline of the high street. eCommerce businesses can provide lower prices due to lower overheads, and greater convenience, with next-day home delivery in many cases. But eCommerce has been growing for over twenty years – it’s hardly a surprise that was sprung on the high street overnight. Not only that, some retailers continue to grow – Primark makes huge profits without even having an eCommerce presence. And consumers are in fact still spending – eCommerce sales are expected to exceed £184 billion in the UK in 2019.

So what’s the solution? With greater overheads, without cutting margins razor thin, how can the UK high street survive? Even without facing these difficulties, retailers needed to look to their future, by taking their cue from eCommerce. Going forward, eCommerce isn’t the enemy – and in fact, could be the saviour of the UK high street.

Taking a blended, omnichannel approach will help customers remain engaged with retailers. Even Amazon is working to create offline locations – just look at Amazon Go! We’re not saying that all retailers should try to emulate their business model – clearly that isn’t possible. But by increasing offerings and services, bricks and mortar retailers can remain popular with customers.

These partnerships can be mutually beneficial between online and offline retailers. Where high street locations aren’t economically viable for businesses, creating partnerships can enhance the customer experience and profits all round.

Consider a small high street retailer who partners with an eCommerce company that aligns with their brand values. They might keep very limited stock for certain items, with more stock available to be DropShipped directly to customer homes. The customer sees the item and decides to buy it. The store then places the order and takes payment. Their eCommerce partner sends the order the same day, to arrive the next day.

The customer benefits from the arrangement because:  

·       They’ve made sure they want the product

·       They can speak to an advisor

·       They know their order was placed successfully

·       They don’t have to put their card details into a website

·       They know which day their order will be delivered

·       They don’t need to be confident with using technology

This arrangement is great for customers who prefer to shop offline. Both retailers benefit – and chances are, the customer bought another item while they were in-store too. Even if they didn’t it’s likely with a positive experience, they’ll return to make further purchases.

If the retail location can process returns too, they see increased footfall and in-store sales. Customers receive an enhanced experience from both brands, and the eCommerce company receives more sales, faster returns and reduced costs.

Further application of technology can provide bricks and mortar retailers with more options to increase footfall. Click and collect sales are expected to account for 61.2% of spend by 2022. Whether that’s through partnerships or through lockers in-store, that’s a lot of potential to work with.

Partnering with eCommerce businesses isn’t the only way retailers with outlets can diversify their offerings though. Consumers are becoming accustomed to ordering a wide range of products in one place. High street retailers can capitalise on this. A reciprocal arrangement might provide an EPOS point showing stock a partner across town has. The point might have various options – for click and collect, home delivery and different payment options.

There isn’t a magic solution to save the high street. But the government is aware, and is looking at changing the planning system to help. Brexit will happen, one way or another. But with the right application of technology, and thinking creatively, retailers can adapt and secure their growth into the future.

About the Author

Tejas Dave, Founder and CEO of eBusiness Guru and Avasam, has been helping eCommerce businesses worldwide since 2010. Evasam is a platform that allows wholesalers and sellers to collaborate. Tejas is revolutionising the shipping industry and creating a new level of financial stability with the aim of creating 5,000+ jobs within the UK. Tejas is using technology and automation to provide solutions to e commerce challenges by removing the limitations that are currently placed on what and where people can sell.

BRC: ‘Britain stands on a knife edge’

Retail leaders have been digesting the implications of the UK’s ongoing Brexit crisis in light of last week’s vote by Parliament to extend Article 50.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said:
“[The] vote offers a glimmer of hope, but it is now absolutely essential that MPs put aside their differences and coalesce around a positive route forward.

“Without definitive action by MPs in the next six days, we will see the UK crashing out of the EU on March 29th without a deal. This would inevitably lead to higher prices and less choice on the shelves for consumers. The uncertainty surrounding a no deal Brexit is already harming the UK economy.

“Britain stands on a knife edge. Parliament must put an end to this uncertainty.”

The BRC chief exec also issues a statement following the government’s announcement of the ‘no-deal’ tariff schedule.

“At last businesses have some clarity about the tariff schedule they will face under a no deal Brexit. Already hundreds of ships are on their way to Britain and are only now discovering what tariffs they may face.

“Consumers look to be no better off as a result of a mix of tariffs and quotas on food and other products. We remain particularly concerned about tariffs on certain clothes and textiles – a good proportion of which consumers were getting tariff-free from countries like Italy and Turkey.

“However, it is the non-tariff barriers which will have the greatest impact on consumers. Tariffs, checks, and increased documentation requirements will all result in delays, higher prices, and reduced choice for consumers. This is an inevitable consequence of a no deal Brexit.”

“The announcement that there will be no enforcement of custom checks and tariffs moving across the Irish border presents the biggest risk. Without these checks and controls, and with essentially a different tariff schedule in operation, the system would be a goldmine for criminals seeking to take advantage of a no deal Brexit.”

“Parliament must find a way of taking no deal off the table or risk harming the people and businesses of Great Britain and Northern Ireland.”

GUEST BLOG: How will Brexit affect eCommerce?

Brexit brings a wave of uncertainty and change to the UK business landscape, and since the day the UK voted to leave the EU, it’s been a whirlwind.

But what will the landscape look like leading up to, and after Brexit? What kind of impact will it have on eCommerce, especially smaller sellers just starting up?

With thousands of startups launching each year, will the looming shadow of Brexit threaten the livelihood of new businesses and discourage people from starting out?

Khaos Control delves into what the future looks like for both new and established eCommerce businesses, with the recent Brexit upheaval…

The recent rejection of the withdrawal deal has left so many (un)expected changes and regulations on the horizon. The public is left wondering what the next steps are, with the chance of a no deal impending. Although nothing can be predicted for sure, knowing what may be in store will allow retailers and businesses alike to prepare and adapt to a post-Brexit reality. Here are a few areas that eCommerce sellers will need to consider now and in the future:

Tariffs

The import of goods due to tariffs is an area predicted to be affected post-Brexit. As an EU member, Britain has always had the luxury of free trade with the EU, and other EU enabled countries such as Norway, Switzerland, South Korea and Africa. However, with Brexit underway, eCommerce sellers currently importing goods from the EU, or selling to customers in the EU, may see tariffs and additional taxes on goods occur. Business for Britain estimates tariffs costing British exporters £7.4 billion a year. SME’s shouldn’t see too much of an impact as fees would likely be the problem for the customer you’re sending goods to, unless you decide to pay these import fees beforehand (which isn’t recommended). If you’re a larger eCommerce enterprise, some consideration and planning will need to occur to ensure you’re ready for the tariffs and fees coming your way.

Increase of sales in Europe

With the value of the British pound dropping to become one of the worst performing currencies worldwide, imports to the UK have become more expensive, whilst  British goods and exports have become cheaper to shoppers in Europe. In the case of eCommerce platform XSellco, their UK clients boosted their sales by 49%, with European customers making up 15.5% of total sales a month, up from 12.8% the year before.

In light of this, UK seller’s, should consider European marketplaces and ensure their eCommerce store has auto-translation features, as well as the ability to support multiple currencies.

Order fulfilment

For UK eCommerce sellers who sell products to consumers outside of the UK, the changes in value-added tax will have an impact. If the UK leaves the EU with no Brexit deal, businesses would no longer have to collect VAT from sales to customers in the EU. No VAT means prices would most likely be lower for products, however, fulfilment and shipping may be slower. This is because of cross-channel trade disruptions like customs and product conformity procedures.

Deal or no deal, putting a solution in place to help with fulfilment is advisable, in order to make the process easier either way. A software system will implement structure and automation into day-to-day business, speeding up the packing and shipping process, as well as ensuring your business delivers to customers as quickly as possible, which is both advantageous in light of Brexit and also favourable by current and future customers.

Searching closer to home

With the overwhelmingly negative press surrounding Brexit, it’s safe to say a lot of UK shoppers may start to feel uncertainty with looking abroad for the best deals. As a UK eCommerce business, you may well see your UK sales increase as a result of Brexit, as customers are looking closer to home for deals in fear of tariffs or hidden costs that they may be forced to pay for themselves.

If you’re a seller located in the UK reevaluating your marketing campaigns to target British customers would be a valuable move. You could use key British holidays to attract customers to your products or use seasonal cues to encourage more of a British audience. Also evaluating your competitors is key, because while UK shoppers may be more inclined to buy products from those close by, they won’t be afraid to find the best deals and shop around.

Lack of skilled workers

Another possible consideration for eCommerce businesses is a shortage of skilled workers. Brexit could introduce new visa requirements and other limitations, which would make it much more difficult for businesses to outsource workers from the EU, with working visa requirements both a challenging and time-consuming process. This could be especially challenging for businesses that require staff to have skills such as speaking in more than one language. In 2016, it was reported that more than 80% of the adult working-age population within the EU, knew one or more foreign languages. With reported stats, it seems some changes may need to be made for those businesses that outsource workers from the Eurozone, as outsourcing multi-lingual customer service will only become more expensive. Increased labour costs will also contribute to the price customers will pay for a product or service, and in turn affect the supply chain.

For eCommerce businesses worried about Brexit, planning for potential pitfalls is key. Despite all we know about Brexit, there are still changes to come that can’t be predicted till they happen, so preparing for potential issues (or gains) is best to ensure when the time comes, Brexit doesn’t rock your business boat too much.

BRC welcomes Chancellor’s stance on online retail taxation

The British Retail Consortium has given the thumbs up to Chancellor Philip Hammond’s stance on tax for online retailers, in addition to its view on a number of other policy proposals from both the Conservative and Labour parties at their respective conferences.

In his speech to Conservatives in Birmingham, Hammond revealed that he is considering is a so-called digital sales tax to make sure there is parity between High Street retailers and eCommerce giants when it comes to HMRC.

There has been much debate recently as to ways High Street retailers could be helped through tough times by tax reform, especially as the online players many of them compete against often pay much less to the Exchequer, as highlighted by the recent Amazon our cry.

In his speech, Hammond said: “The global internet giants must contribute fairly to funding our public services. The time for talking is coming to an end and the stalling has to stop. If we cannot reach agreement, the UK will go it alone with a digital services tax of its own.”

In response, Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said that the organisation welcomed the sentiment, but that special care must be taken to ensure already struggling bricks and mortar retails with online operations are not unintentionally punished:

“We agree with the Chancellor that the business tax system is in need of reform and we agree that the best way forward is through international agreement via the OECD,” said Dickinson. “We note the Chancellor’s intention to levy some form of services tax on internet companies and we are pleased he hasn’t been tempted to propose an online sales tax which would be an additional burden on retailers many of whom have online as well as physical stores.”

The BRC was also vocal on the issue of Brexit while cautiously backing the Chancellor’s general ‘back to business’ messaging, with Dickinson adding: “The retail industry firmly agrees with the Chancellor that we need friction free access to Europe to continue. A no-deal Brexit is not an option regardless what fiscal options the Chancellor can conjure up. Our food supply chain in particular relies on just-in-time practises which require frictionless trade with no delays at our borders. We must avoid the cliff edge in March at all costs. It is essential that the UK Government finds a workable solution to the Irish backstop fast, so that the Withdrawal Agreement gets over the line and tariff-free trade is protected during the transition period. Time is running out.”

“The Chancellor’s pledge to “Back Business” is welcome but the retail industry needs to see action. We require a commitment that the Treasury will reduce the overall business rates burden immediately. If the Government is to actively get “Back Business” they must support the retail industry, the country’s largest private sector employer, and reduce this disproportionate and outdated form of taxation.”

The BRC has also commented on proceedings up in Liverpool at the Labour Party conference, in particular honing in on retail-sensitive issues and policy points in Jeremy Corbyn’s keynote, most notably beats that pointed to potential cost increases for retailers.

“Retailers want to be part of building a fair, innovative and productive UK economy where society benefits,” said Dickinson. “But many may feel concerned that parts of this speech will really mean increases in business costs or taxes for an industry already under pressure.

“[On Brexit] is right to say that the business community wants to see a deal with the EU to support the free flow of goods and the role of EU workers to the British economy. Very rapid progress is needed on the Irish backstop to secure a withdrawal agreement that will provide certainty and avoid a damaging cliff-edge for retailers and consumers in March.

And on on Inclusive Ownership Funds, Dickinson added: “There are a number of great examples of employee ownership in the retail industry and retailers work hard to ensure that colleagues across the workforce have a voice. However, there is a fear amongst our members that the proposed model, which would channel excess funds into the Exchequer, would act as an indirect tax on an industry that is already under immense cost pressure.”

Ecommerce continues to drive UK logistics sector despite Brexit uncertainty

The UK logistics property market dipped in spring 2018, as economic uncertainty made for heavy weather, according to data from Cushman & Wakefield.

In total, 6.3 million sq ft was transacted between April and June this year, 32% down on the y-o-y total and largely due to uncertainty surrounding Brexit.

Ecommerce continued to dominate take-up, accounting for nearly 50% of all deals, with Amazon investing in its first ‘mega’ shed (1.5 million sq ft) in the North East.

The report also revealed that developers are addressing the demand/supply imbalance through new construction, with 8.7 million sq ft of speculative space due to reach the market in 2018.

As a result, Grade A availability has risen by 18% to 23 million sq ft since the beginning of the year, with the South East and North West registering the sharpest increases (59% and 52%) over this period.

Prime annual rental growth for larger distribution units returned toward the five-year average, with Wales (9.7%) and the South East (6.0%) registering the most significant uplifts. Prime yields have stabilised at 5.2%.

In the Investment market, preliminary estimates revealed that £2.5 billion worth of logistics/distribution properties changed hands in H1, down 26% on the corresponding period in 2017. Despite the slowdown, interest in the sector remains strong, particularly from overseas investors.

The report highlighted that, regardless of Brexit, UK logistics property is expected to continue to benefit from the growth of ecommerce which reached a new high in May, accounting for 18% of total sales.

Bruno Berretta, UK Logistics & Industrial Research & Insight, Cushman & Wakefield, said: “With less than a year before the UK officially leaves the EU, many occupiers have turned their attention towards Brexit and this has had a material impact on the deal flow in Q2, with fewer transactions agreed.

“Unless there is a visible breakthrough in negotiations, this uncertainty could extend into the second half of the year, when an official declaration outlining a blueprint for future UK-EU trade is expected during the quarterly EU summit in October. An upturn in activity is possible particularly given that enquiry levels for units of 50,000 sq ft and above have remained relatively stable in H1 2018 compared to H1 2017.”

Gordon Reynolds, International Partner, Logistics & Industrial at Cushman & Wakefield, said: “Recent announcements by the development community suggest that speculative completions in 2019, while unlikely to match 2018 levels, will remain sustained, pushing availability further up. Nonetheless, the market is far from oversupplied and new product will continue to test the rental ceiling.”

Retail community voices Brexit white paper hopes & concerns

The White Paper outlining the UK Government’s proposed future relationship between the UK and European Union after Brexit has received a mixed response from leading retail and supply chain industry figures.

The British Retail Consortium (BRC) issued a statement in which it repeated concerns that in the event of a no-deal Brexit, movement of goods between the UK and EU would be severely impacted, even if the UK kept its border open for goods.

Specifically, it cited:

  • The EU exports £21 billion of goods to the UK and a third of the food consumed in the UK is imported from the EU. The UK’s highly complex food supply chain – and the excellent value and choice it offers UK consumers – depends upon frictionless trade with the EU. The livelihoods of tens of thousands of farmers and food producers in the EU also depend on it.
  • This supply chain is fragile. Failure to reach a Brexit deal – the cliff edge scenario – will mean new border controls and multiple “non-tariff barriers” through regulatory checks, creating delays, waste and failed deliveries.
  • This could lead to dramatic consequences, with food rotting at ports, reducing choice and quality for UK consumers. It could also lead to higher prices as the cost of importing goods from the EU increases.

Richard Pennycook, Chairman of the British Retail Consortium, said: “We must avoid a cliff edge scenario on the 29 March 2019 at all costs. Failure to achieve a smooth transition will create a lose-lose scenario for UK consumers and EU producers. Our food supply chain is complex, highly organised and ultimately fragile. Even if the UK keeps its borders open, the EU application of regulation and tariffs at borders in relation to the UK would cause significant delays and will lead to food rotting in transit.

“Frictionless trade is essential if the industry is to continue to provide the level of choice and value in shops that UK consumers are used to seeing. It is now of the utmost importance that the UK Government gets the Withdrawal Agreement over the line and allows for a smooth transition. We also need the EU to be flexible and creative in negotiation and recognise what is at stake for exports to the UK. Time is running out.”

Meanwhile, James Hookham, Deputy Chief Executive of the Freight Transport Association (FTA), said the solutions outlined offer encouragement for those tasked with keeping the nation’s complex supply chain moving freely, but will require a similar level of imagination and optimism from the UK’s European trading partners.

He added: “[The] White Paper includes positive proposals for many areas which have caused concern for the logistics industry, and should give businesses, which have been worried about a lack of clarity over future trading arrangements, some level of reassurance. It is now Europe’s turn to step up and deliver a similarly supportive, encouraging plan which will minimise the barriers to continued frictionless trading arrangements as the UK leaves the EU.”

Robert Keen, Director General of the British International Freight Association (BIFA) expressed mixed feelings about its contents. He said: “The White Paper addresses some of the issues that BIFA has highlighted over the past two years, including retaining something as close to the Single Market and Customs Union as is possible, with positive ideas on future Customs matters and international trading arrangements.

“But we have to remember that nothing in the White Paper is cast in stone. The proposals on Customs, where the UK is proposing to apply EU tariffs to EU goods passing through the UK, while having the freedom to set different tariffs on goods entering the UK, look complex and untested, something that has already seen negative comment from the EU.

“Other than a facilitated customs arrangement, I suspect that there will be other areas where there will be differences of opinion between the UK and EU.

“Notwithstanding the above, it is the most comprehensive and cogent proposal put forward by the UK Government to date and is a useful basis for negotiation with the EU.

“However, we need to be realistic. It still has to get through parliament, even before the negotiations in Brussels.”

The UK Chamber of Shipping, meanwhile, has given the Prime Minister’s White Paper its seal of approval, and demanded the European Union now ‘gets serious’. Director of Policy David Balston said: “The Prime Minister is to be commended for this detailed paper which shows the government has listened to industry’s concerns.

“This vision for the UK’s future relationship with the EU is bold, comprehensive, ambitious and robust. It is good for both the UK and the EU economy; it guarantees both that the referendum result will be delivered, as well as the free flow of goods over national borders.

“Just as importantly, it will put the UK at the forefront of global customs arrangements, making UK customs processes streamlined not just for European trade, but for trade with countries around the world – allowing the UK to further develop its status as a global trading nation.

“It is time now for the EU to get serious and stop being prisoner to its own dogma. The UK is being constructive, collaborative and realistic. If the EU dismisses these proposals, as it has previous iterations, or tries to push the UK even further, then the risk of a no-deal Brexit will rise dramatically. If that comes to pass it will be because of their own intransigence, and they should be under no illusions: a no-deal scenario would significantly damage the European economy as well as the UK’s.”

BRC warns of food supply issues in event of hard Brexit

The British Retail Consortium has warned Prime Minister Theresa May that a so-called ‘cliff edge’ Brexit could cause significant food supply issues in the UK.

The industry body has written to May and the European Union’s Chief Brexit Negotiator Michel Barnier to highlight the potential for damaging consequences for millions of UK consumers and tens of thousands of EU-based producers if an agreement in the Brexit negotiations is not reached that protects the free flow of goods between the EU and UK from 29 March 2019.

A third of the food consumed in the UK is imported from the EU. The letter highlights how the UK’s highly complex food supply chain depends upon frictionless trade with the EU. It says the livelihoods of tens of thousands of farmers and food producers in the EU also depend on it.

The BRC says the cliff edge scenario will mean new border controls and multiple ‘non-tariff barriers’ through regulatory checks, creating delays, waste and failed deliveries.

This, it says, could lead to dramatic consequences, with food rotting at ports, reducing choice and quality for UK consumers. It could also lead to higher prices as the cost of importing goods from the EU increases. And in the EU, £21 billion of exports to the UK are at stake.

Richard Pennycook, Chairman of the British Retail Consortium, said: “We must avoid a cliff edge scenario on the 29 March 2019 at all costs. Failure to achieve a smooth transition will create a lose-lose scenario for UK consumers and EU producers. Our food supply chain is complex, highly organised and ultimately fragile. Frictionless trade is essential if the industry is to continue to provide the level of choice and value in shops that UK consumers are used to seeing. It is now of the utmost importance that the UK Government proposes a workable solution to the backstop that gets the Withdrawal Agreement over the line and allows for a smooth transition. We need the EU to be flexible and creative in negotiation and recognise what is at stake for exports to the UK. Time is running out.”

Read the letter here.

KEY FACTS

• 50% of Britain’s food is imported and of that 60% comes from the EU-27.
• In 2016 3.6 million containers from the European Union passed through UK ports, just under 10,000 per day, delivering 50,000 tonnes of food to UK consumers.
• Salad leaves can be picked and loaded onto lorries in Spain on a Monday, delivered to UK stores on a Thursday and still have 5 days’ shelf life.
• BRC analysis finds that food and beverage products would face an average increase in the cost of importing from the EU of up to 29% from non-tariff barriers, under a no-deal scenario.
• BRC figures estimate that more than 12,500 small retail businesses will be at high risk of going bust in the event of no deal.

BRC calls for retail reinvention in the UK

The British Retail Consortium has issued a rallying call to the industry, encouraging reinvention in both business and political terms during what is ‘an unprecedented period of change’.

Writing on the BRC blog (published in Drapers), the organisation’s Chief Executive, Helen Dickinson, highlighted recent worrying key trends, including:

  • There are 2,485 fewer retail stores in the UK than there were three years ago.
  • Just over 16% of all sales were made online last year – up from 12.5% just two years before.
  • Since the beginning of 2015, there have been more than 3,200 retail insolvencies in the UK and a growing awareness of company voluntary arrangements (CVAs) most recently involving high street household names such as Mothercare, New Look and House of Fraser.
  • For customers, the squeeze on real earnings is unrelenting and a drag on spending is expected to continue as real wage growth remains weak.

Dickinson then detailed several ways in which proactive steps can be take to turn the High Street tide: “Politically, there is much the government can do to help relieve some of the pressure on the high street. The business rates system is not fit for purpose. It is a big cost burden – retailers contribute around 5% to the UK economy, yet pay 25% of business rates.

“This is simply not sustainable. It acts as a barrier to investment from new entrants to the industry and discourages the reinvention of our high streets at a time when retailers are struggling to adapt to shoppers’ changing habits.”

Dickinson added that this and the growing rates bill is a big part of the calculation when retailers are thinking about rationalising their store portfolios – only this week has Marks & Spencer outlined more store closures over the next few years.

Brexit is also cited: “We also have to continue to make the case for tariff-free and frictionless trade as vital outcomes for retailers from the Brexit negotiations if we are to avoid increasing prices and creating less choice for consumers.”

Of course, there are internal changes needed too, however, with Dickinson highlighting the fact there is too much retail space across the country: “In the future, there will be fewer shops and their role will be different – more engaging and based on creating experiences for customers. Online will continue to grow, but seeing online and stores as two separate channels will become increasingly irrelevant. This will deliver better service and experiences for customers, and enable new emerging brands and entrepreneurs to grow. And the role for technology and innovation will expand exponentially.

“The future is bright, but we must create the opportunities to ensure it’s not armageddon retail but reinvention retail.”

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