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RetailX Brand Index 2019

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Brexit: the retail effect one year on

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Brexit: the retail effect one year on
Brexit: the retail effect one year on
A year on from the UK's decision to leave the European Union, more than two-thirds of retailers have yet to make a plan for how they will manage the change, according to new data. However, another study finds that Brexit is already having an effect on day-to-day online shopping, and the British Retail Consortium is campaigning for a consumer-focused departure.

Some 68% of UK retailers have yet to start planning for Brexit, despite the fact that the UK voted to leave the European Union a year ago today, says cross-border ecommerce specialist Global-e. That's up from the 60% that Global-e found had made no plans for potential leave vote before the referendum took place.

Nir Debbi, co-founder and CMO at Global-e, says that news of falling high street sales in May adds to pressure on Prime Minister Theresa May to abandon plans for a hard Brexit.

"Political and economic uncertainty is likely to continue as negotiations between the UK and the EU began next week. To continue long term plans to take advantage of rapid growth in cross-border ecommerce, the important thing for retailers today is to prepare their operations in the short term to tackle the complexities that will undoubtedly arise when Britain leaves the EU.

"For example; the UK leaving the EU will likely change the regulation in terms of compliance with “EU distance selling regulation” in particular, the “distance selling” VAT compliance of UK retailers selling to EU countries. Cross-border retailers who sell to EU countries need to review their current VAT arrangements and re-consider their short and long term solutions."

Meanwhile, postcode and data specialist PCA Predict has analysed ecommerce spending in the wake of the Brexit vote and sees a correlation between key events related to leaving the EU, from the referendum result to the General Election, and significant dips in online spending.

While UK retailers collectively took an average of 3.9m daily ecommerce orders over the course of 2016 and 2017, PCA Predict says its data shows that sales fell by up to 60% on those key dates. On June 24 last year, the day the result was announced, online orders fell to 1.64m, while on general election day they fell to their lowest level yet, at 1.58m. On the day that the House of Commons voted to trigger Article 50, the mechanism by which the UK is to leave the EU, online purchases came to 1.95m, dipping to 1.69m on the day that Article 50 was triggered.

Meanwhile, shopping rose significantly, to 3.58m purchases, on the day the Supreme Court met to decide whether Parliament or the Prime Minister had the power to invoke Article 50. However, since this date was in early December (December 5 2016) it is likely that Christmas shopping was also a factor in this rise.

Chris Boaz, head of marketing at PCA Predict, said: “Currently British consumers spend more than any other shoppers in Europe, accounting for nearly one third of all online purchases. Yet as our data shows, Brexit has seemingly shook consumers’ confidence.

“This has serious implications for online retailers and shows how hard they now need to work to not only gain, but also retain customers. If a consumer can’t easily purchase something online, via the checkout, then a retailer is in trouble.”

The PCA data found that the fashion sector performed consistently the best for online purchases on those key dates, followed by the food and drink industry.

The British Retail Consortium is responding to current uncertainty in what Brexit will mean for the retail industry with a Fair Brexit for Consumers campaign – and argues that doing so will lead to the fairest settlement for the country as a whole.

In her response to this week's Queen's Speech, BRC chief executive Helen Dickinson said: “The retail industry’s biggest priority is to work alongside the Government to secure a fair Brexit for consumers. This means ensuring that ordinary shoppers aren’t hit with the cost of unwanted new tariffs and the UK is able to build new trading relationships with the rest of the world in the long-term. In particular, we will seek to work with the Government on the new Trade Bill, which will help in the development of international trade relationships and the Immigration Bill.

“Employers throughout retail must be able to secure their current workforce and fill vacancies in the future. To do this, the Government must secure the rights of EU nationals living and working in the UK at the earliest possible opportunity during the withdrawal negotiations with the EU. We will also seek to work with government to design a new immigration policy that balances the need to control numbers with businesses’ requirements for non-graduate labour to fill vacancies.”
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