Almost a third of retailers have seen their international online sales rise as the pound as weakened following the UK’s vote to leave the European Union, and more than half say they’ve seen an impact as a result of the 2016 referendum, a new study suggests.
While 32% of traders who sell internationally have seen an increase in overseas sales, and 21% have seen UK sales rise, 30% have seen a fall, and 47% say they’ve seen no impact at all.
But only 68% are yet started planning for Brexit, found a survey of 250 British retail decisionmakers commisioned by cross-border ecommerce specialist Global-e.
Almost half (48%) of retailers questioned said they expected the economy to weaken after the UK triggers Article 50, but 62% feel confident or very confident that their businesses will flourish.
“As the Brexit bill moves through Parliament, retailers are facing up to the reality of what Britain’s exit from the EU might mean,” said Nir Debbi, co-founder and CMO, at Global-e, which works with UK retailers including WoolOvers, Prezzybox, and Crabtree and Evelyn. “Although some retailers have revised their plans, our research suggests that most are taking a wait-and-see approach, before considering whether to change course. In the months since the EU referendum took place, most retailers have already felt some impact, with many of those that operate internationally seeing an increase in sales from online shoppers worldwide due to the weakened pound and growing trend for cross-border ecommerce.”
Some 51% say they expect cross-border trading to become more complex when the UK leaves the EU, and 63% think consumer prices will increase in UK stores. Half (51%) of retailers that sell internationally expect the UK’s departure from the EU to make cross-border ecommerce more complex. However, 44% of the retailers who are currently selling to shoppers internationally stated that they are continuing with their existing international operations and 23% are planning to invest more in growing their business outside the UK.
“The UK leaving the EU will likely change the VAT compliance of UK retailers selling to EU and the distance-selling regulations related to duties and taxes,” said Debbi. “How exactly this will be changed depends on the negotiations, however it is likely to increase the complexity of selling cross border, hence the logistics work and costs. In order to avoid any negative impact on their cross-border sales and the customer experience offered to international clients, UK retailers selling internationally should be ready to react to this as legislation is agreed and be wary of the impact it could have on their EU customers.”
Retailers appear divided on which ‘Brexit’ is best for business. Almost half (46%) are in favour of a ‘soft’ Brexit, with some access to the single market, while over a third (36%) think that a ‘hard’ Brexit, with no access to the single market, would be better for UK retailers.
A ‘Brexodus’ of UK retailers appears unlikely: Despite concerns that businesses may move their headquarters outside the UK, Global-e found that just 16% of UK retailers would consider moving all or part of their business to an EU country to retain access to the single market.
Retailers expect consumer confidence to be affected: More than two-thirds (71%) of retail decision makers think that consumer confidence will be impacted by Brexit. Three-fifths (63%) of retail decision makers surveyed said they expect prices in UK stores to increase once the government triggers Article 50, and around two-fifths (43%) expect consumers to reduce spending, while 28% predict that spending will increase.
Debbi added: “Our research suggests that the effects of Brexit on UK retail may be less black and white than some commentators anticipated. While many retailers that sell imported goods to UK shoppers have seen prices rise due to the weakened pound, those that sell to international shoppers on the web appear to be reaping the rewards of cross-border ecommerce, with 32% seeing sales increase.
“However, relying on currency fluctuations will not be enough for long-term success. To make a success of cross-border e-commerce in Brexit Britain, retailers should review the experience they offer to shoppers in Europe and around the world. With the right preparation, technology and processes in place, retailers can seize new opportunities and tackle any challenges created by Brexit, to drive online sales internationally.”