High street retailers have had a tough time in recent months. The recent announcement by House of Fraser that they are going to close 31 of their 59 department stores was yet more evidence that the world of retail as we once knew it has changed forever. The closures of so many bricks and mortar retail outlets in Britain has been blamed on many things including the rise of online shopping; the high costs of renting buildings and Brexit.
But are retailers right to point the finger at Britain’s decision to leave the European Union? To some degree, they probably are. After all, there is no doubt that Brexit concerns have dampened consumer optimism, though this is proving to be less of an issue than originally feared.
But in terms of measurable impact, the jury remains out. After all, it’s still uncertain as to when the ‘divorce’ will be completed and what impact this will have. But whether you voted to leave or remain, and whatever the conjecture might be on impacts, there will almost certainly be winners and losers.
A disappearing workforce
According to the British Retail Consortium, 6% of the retail industries 170,000 workforce are EU citizens who are currently free to work in Britain for as long as they choose. If that changes, there are fears that prices will rise and home deliveries could be slower, a retail trade body has warned. Most of these workers are concentrated in warehouse and distribution jobs; a growing part of retail.
If it transpires that Brexit impacts retailers’ ability to recruit enough workers, the winners will be those who invest sufficiently in warehouse automation. Technology has been proven to not only allow retailers to reduce headcount (with associated cost savings), but also to scale up and down to meet changing, seasonal demands. Other benefits include better use of space, more accuracy and faster work flow.
Import and export complexity
New trade deals will now have to be put in place with EU member states. For many, the fear is that this will add complexity and cost. According to Jonathan Reynolds, Associate Professor in Retail Marketing at Oxford University, “… inflation is likely to tick up through price increases as a result of exchange rate effects on import prices”. That would mean a dampening of sales across the board. However, as Reynolds notes, digitally savvy online retailers may well enjoy a boost as consumers use online price comparators to find the best deal. There is also an opportunity for them to address other more profitable markets like Australia, New Zealand, Russia and China, considering them no more complex to trade in than EU countries where growth is less likely.
It’s also true that many retailers will increasingly partner with organisations like The Royal Mail Group who will take the complexity of cross-border trading away, helping streamline the process of trading within the EU. In fact, it’s arguably getting easier to sell across borders as it’s in everyone’s interests to keep it simple, with the advent of automated customs documentation.
Investing in tech
Despite two thirds of retailers seeing Brexit as leading to damaging unpredictability in the sector, many see investment in technology as a significant antidote. Research, carried out by VoucherCodes suggests that mobile commerce remains one of the few areas retailers are confident will remain stable, with all retailers surveyed believing the UK’s mobile retail presence will be even stronger by 2022. As a result, more than a quarter of UK retailers will be investing heavily in their mobile presence over the next 12 months, whilst almost a third plan to redesign their online presence, including mobile eCommerce sites and social channels.
More generally, an overwhelming majority of UK retailers (99%) see new technology investment as key, showing confidence in digital investments across the board. In fact, nearly 20% of retailers plan to also invest in bringing tech into the physical store, for example by giving staff tablets on the shop floor.
Brexit retail winners
As beleaguered retailers jostle for a winning position post-Brexit, investment in technology seems to be a recurring theme and it’s easy to see why. Post-Brexit, it’s arguably more important than ever that retailers work with technology partners who can help them transform to take advantage of opportunities arising out of Brexit, whilst those that don’t invest, or simply can’t, will inevitably fall by the wayside. Whatever the case, the UK remains a strong, wealthy economy compared with most and wealth is always good for successful retailing. The winners will be those most able to adapt.