- Trade deals.
- The retail industry’s reliance on non-UK workers.
- Possible positive opportunities for retailers.
The Effect of Brexit on Online Retail
- Online food shopping
- Click-and-collect orders
- Same-day deliveries
In the majority of continental European countries, these innovations are either poorly developed or do not exist. Brexit will reduce British exports and boost the price of imports coming into the UK. Additionally, this will potentially reduce British firms’ market reach & revenue. For retailers in other EU countries, how does this impact them? If the UK choose not to uphold the free trade agreement with other EU countries some gaps in the market may emerge. This decision could create new opportunities for smaller EU countries to fill the developing gaps in the market.
What Could Brexit Mean For Online Retailers Outside of The UK?
The barrier-free trade among EU member states might cease to include the UK. This will mean that online retailers outside of the United Kingdom might be impacted by higher taxes and tariffs. Regrettably, cost increases often affect small and medium online retailers more so than large eCommerce sites. The current situation is still unfolding so for right now, it is not yet clear to what extent the UK will be able to sustain the free trade agreement. Only once majorly important decisions are taken will any of us be able to know the full effect of Brexit on online retailers.
Brexit & Retail: What The Experts Say
- Apprehensions about immigration laws that may potentially crush the UK’s talent pool as many digitally savvy, customer facing professionals will migrate out of the United Kingdom.
- Product as well as delivery advancement will slow down as businesses look to spend more effort and time to work with pioneering companies across borders.
- Ambiguity over privacy regulations.
- Less access to data will obstruct companies’mission for insight.
- London's financial services power will move on to the continent.
- Global automotive & manufacturing companies will also move their innovation out of the United Kingdom.
What Retailers Need To Consider
- Ascertain how you position your business to receive opportunities arising from this commotion.
- Have a contingency plan in place should the UK go into a recession.
- Contemplate the impact on any live deal discussions, including communication strategies, implications for contractual positions and ‘Brexit clauses’.
- Quantify the labour market impact on your company as the country begins to lose access to workers from other parts of the EU.
- Ascertain how EU citizens in the UK would be treated.
- Consider the impact on these peoples’ visas and families as well as the rights awarded to these people.
- Contemplate the impact on current liquidity positions, investment funding, finance positions as well as the stability of new funding sources.
- Appraise current hedging exposures and strategies: the UK vote to leave will boost Foreign Exchange (‘FX’) volatility, counterparty & interest rate risk.
- Contemplate the extra costs that might come through selling in EU markets.
- Review your supply chain, in particular, where it is heavily EU integrated.
- Recognise how this will affect your suppliers, stakeholders and customers.
- Determine any of your contracts that may be at risk of cancellation as a result of a material adverse clause.
5. Accounting, Legal & Tax
- You will have to determine which parts of tax law would remain in force and which tax laws would move over time.
- Understand the impact and effect of Accounting Standards on your business.
- Consider which EU legislation will be retained in the direct aftermath of a UK decision to leave the EU.
- Deliberate the possible indirect tax effects (customs and VAT) on the movement of goods.
- This will come on as a result of duty rates for trade becoming uncertain as well as the possible increase in costs and administrative issues.