As the UK approaches the 29th March 2019, companies are yet to fully comprehend the impact Brexit will have on retail. As political negotiations and parliamentary votes are yet to settle the final rules and implications of the UK’s departure, unknown territory must be navigated in planning for the Brexit transition process.
The Parliamentary vote on the Withdrawal agreement previously scheduled for 11th December has been delayed, so the final result of the Brexit negotiations remain uncertain. If the deal is accepted plans will be in place to proceed with the terms of the deal including a two year transition period and backstop agreement on the Irish border. However if rejected the UK will continue to face uncertainty. The analysis of the report takes three key Brexit scenarios to look at the implications for retail.
Brexit outcomes that create trade divisions between the UK and the EU will see a potentially steep increase in food prices. Higher import costs (through tariffs and the falling pound) that retailers will in part pass to consumers as well lack of availability (due to border delays) will result in higher demand and limited supply. This would see prices on basic foodstuffs rise by as much as 10% in a worst-case scenario.
Non-food retail growth is expected to slow significantly in the event of no deal, with the forecast rise in inflation failing to offset a drag on consumer confidence and a sharp decline in volume growth. As a higher proportion of disposable spend would be dedicated to food in the face of high grocery inflation, shoppers will cut back on discretionary spend of non-food categories. Clothing & footwear, homewares and furniture & floorcoverings are expected to be most adversely affected by a reduced spending.
Consumer sentiment has been shown to react immediately to political upheaval with uncertainty being a key factor. The case of a no-deal Brexit or delayed withdrawal will almost certainly have an effect on lowered consumer confidence. However, it is expected that a small proportion of consumers who remain positive regarding the future of Brexit and have the means to do so, will continue to spend. If the Withdrawal Agreement is passed, we would see a minimised effect of lowered confidence on retail spend.
The report "Brexit and the Impact on Retail - Thematic Research" provides a comprehensive overview of the UK's proposed departure from the European Union and the subsequent impact on retail. It covers macroeconomic and retail market modelling using different scenarios of the Brexit negotiations; analysis of how immigration, the Irish border and changes to tariffs will effect retail markets; and sector analysis of the individual retail markets.
The report goes on to discuss the impact of Brexit on leading retailers, and provides consumer survey data on sentiments around the expected impact of Brexit on personal finances and shopping habits.
- The outcome of Brexit will have a varied effect on different parts of the retail market. Inflation will drive up food prices and increase the value of the food market, particularly in categories such as dairy, meat, vegetables and fruit.
- As consumers dedicate greater spend to food and grocery, together with falling consumer confidence, non-essential non-food categories such as furniture, homewares and electricals will suffer as volumes fall.
- Learn how macroeconomic fluctuations will effect the retail market in different Brexit scenarios, better preparing your business to cope with pressures in 2019 and 2020
- Explore quarterly forecasts to the end of 2020 in the food and non-food retail markets, so you can see how the two will interact and to what extend inflation will offset falling volumes in total retail
- Delve into the hot issues around Brexit, including immigration, ports, borders and the Irish backstop, enabling you to view the bigger picture of how trade will be impacted by changes post-Brexit
- Read detailed analysis of individual retail markets, so you can alter sales mixes to minimise expected negative impact
- View historic and current consumer sentiment around key Brexit topics such as personal finances and retail spend, giving you a greater view of how consumers will behave as the UK approaches March 2019.
Withdrawal Agreement/form of relationship with EU/Soft Brexit
Delayed or no exit/Second referendum
The impact on retail
THE HOT TOPICS
Ports & borders
The Irish border
THE COST OF TRADE
Imports, exports and tariffs
RETAIL SECTOR ANALYSIS
Food & grocery
Clothing & footwear
Health & beauty
DIY & gardening
Furniture & floorcoverings
The impact of Brexit on consumer sentiment