It’s no secret that 2018 has been a turbulent year for the retail sector so far. News of job losses, the collapse of Toys R Us, Maplin and Poundworld, and the planned closure of 31 House of Fraser stores have all dominated the headlines, painting a picture of Brexit-induced doom and gloom.
The side effects of Brexit, including falling consumer confidence, stilted wage growth and lack of clarity on the UK’s future trading relationships with the EU, are undoubtedly contributing to the continued climate of uncertainty in the sector and beyond. These factors, coupled with rising business rates and operating costs, are placing increased pressure on the high street as spending slows down and shoppers become increasingly price-driven.
Although retailers are feeling the short-term effects of lack of consumer spending, it is predicted that more than three quarters of the impact of Brexit will fall on just five sectors. Financial services, automotive, agriculture, food and drink, and chemicals and plastics are likely to be most affected, according to a study published earlier this year by consultancy Oliver Wyman and the law firm Clifford Chance.
Just this week, the British Chambers of Commerce stepped up its pressure on the Government, publishing a list of 23 ‘real-world’ questions that it says urgently need answers as the UK’s EU exit approaches. The list includes clarity on VAT, tariffs, customs and regulations, with high-profile businesses including Airbus and BMW threatening to review further investment in the UK.
From a retail perspective, there is no doubt that it would be foolish to underestimate the current market conditions and uncertainty that have been forced upon the UK by Brexit, but it is also important to consider there are wider factors at play which are contributing to a perfect storm of unrest – both in the UK and internationally.
Brexit is set against a backdrop of a dramatically changing retail landscape – with e-commerce challenging bricks and mortar stores and placing growing pressure on retailers to keep up with the pace of change and innovation in the sector.
The role of the high street has shifted, with physical stores needing to find a new point of difference to stand out as a destination rather than a place to transact. This could be via an increased focus on customer experiences or providing a greater bridge between the online space, with click and collect collection points.
Retailers offering a true omni-channel experience via their bricks and mortar real estate are those that are best placed to thrive once the wider impacts of Brexit have settled. Utilising the space to create true stand out and synchronising messaging across all channels will be crucial to weathering the storm.
As a global company with an experienced team in the UK, HMY are able to offer insights into how retailers can tackle the uncertainty Brexit brings. This may be achieved through various solutions such as unique concept designs, the latest retail technology to get ahead of competition or putting a focus on expanding globally. Whatever your issue may be, we are sure HMY can provide you with a tailored innovative solution.
