Although the UK could be just days away from triggering Article 50, more than two-thirds (68 per cent) of retailers have yet to start planning for Brexit, according to a survey of 250 British retail decision-makers commissioned by Global-e. This is despite more than half (51 per cent) of British retailers saying that the vote to leave the EU has already impacted UK sales.
Global-e finds that a fifth (21 per cent) of retailers have seen sales increase in the UK, while 30 per cent have seen sales fall and 47 per cent of retailers see no impact at all.
Comparatively, almost a third (32 per cent) of British retailers that sell internationally have seen online orders from outside the UK rise, as international shoppers take advantage of the weakened pound to bag a bargain.
The London-based business commissioned the research to better understand the potential impact of Brexit on the UK retail industry and selling internationally. Global-e finds that retailers are overwhelming positive about the future, three-fifths (62 per cent) of UK retailers surveyed state that they feel confident or very confident that they can continue to flourish internationally once the government triggers Article 50.
Despite this confidence, almost half (48 per cent) of retailers expect the economy to weaken, making it more expensive to import goods. In turn, 63 per cent of retailers think consumer prices will increase in UK stores.
However, with a weakened pound making it less expensive for international shoppers to buy from UK retailers, UK goods could appear more attractive to shoppers around the world.
‘As the Brexit bill moves through Parliament, retailers are facing up to the reality of what Britain’s exit from the EU might mean. 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,’ says Nir Debbi, co-founder and CMO, at Global-e.
‘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 e-commerce.’
Half (51 per cent) of retailers that sell internationally expect the UK’s departure from the EU to make cross-border e-commerce more complex.
However, 44 per cent of the retailers who are currently selling to shoppers internationally stated that they are continuing with their existing international operations and 23 per cent 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. 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,’ Debbi adds.
‘In order to avoid any negative impact on their cross-border sales and the customer experience offered to international clients, British 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 divided on which ‘Brexit’ is best for business
Almost half (46 per cent) of UK retailers are in favour of a Soft Brexit, with some access to the single market, while over a third (36 per cent) 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 finds that just 16 per cent of British 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 per cent) of retail decision makers think that consumer confidence will be impacted by Brexit. Three-fifths (63 per cent) 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 per cent) expect consumers to reduce spending, while 28 per cent predict that spending will increase.
Nir Debbi, comments, ‘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 e-commerce, with 32 per cent 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.’