The retail industry has been left reeling after waking up to the news this morning of the UK voting to leave the EU.
Earlier this week, company directors in retail joined over 1200 other business leaders – including some FTSE 100 chief executives – from across UK's business and finance spectrum to sign an open letter that backed the UK remaining as a member of the EU.
However, with yesterday's EU referendum meaning a Brexit is well and truly going to happen, along with the stock market crash and plunging value of the pound it provoked, several leaders of the retail sector have come forward with varied responses and a call for calm.
The Retail Gazette has compiled some of them here:
Helen Dickinson, CEO of British Retail Consortium:
“Now that a decision has been made to leave, it is important the Government moves quickly to explain the process of disengagement from the EU. Without clarity, retailers, other businesses and hence the economy will suffer from a prolonged period of uncertainty.
We are already seeing the commencement of a period of considerable volatility as financial markets react to any emerging information that might indicate how the new relationship to the EU might be shaped. Retailers should be prepared for the possibility of significant swings, particularly in the exchange rate and consumer confidence.
In order to keep prices down and to deliver the best possible choice for consumers, retailers' top priority in the short term will be to ensure the continued ease and minimum additional costs of importing EU goods into the UK for sale to customers. A prolonged fall in the value of the pound will impact import costs and ultimately consumer prices, but this will take time to feed through. In its exit negotiations the Government should aim to ensure that the trade benefits of the Single Market (i.e. the absence of customs duties) are replicated in the UK's new relationship with the EU.
However, it is important for us all to remember that, even if the government serves notice to leave the EU tomorrow, the process of leaving the EU will take a couple of years, during which time the UK remains a member and EU rules over free movement will continue to apply. Retailers will continue to focus on serving and delivering for their customers day in, day out in a highly competitive market as they do today.
In addition to goods traded with the EU, the Government will need to define the rules that will apply to goods traded with other countries. The BRC stands ready to advise them on this. In the slightly longer term, its important for the Government to explain how it will handle legislation that was previously the responsibility of the EU. This is likely to be a time-consuming and resource intensive process affecting a wide range of stakeholders. We are sure the Government will put in place a clear and effective process for consulting interested parties as it reviews these regulations. The British public has opted to leave the EU and it is now up to the Government in conjunction with our EU neighbours to make the most of that decision.”
British Council of Shopping Centres statement:
“The outcome of the EU referendum is already having a significant impact on the retail and retail property markets. But as the Prime Minister stated earlier today we must remember the fundamentals of our economy are strong, and we must be careful not to talk down our sector, or over inflate the economic, social and political challenges ahead, however real they are.
The impact of today's EU referendum result for our economy, local communities and our political system will become clearer as the days and months go on, but it is likely that constitutional affairs will dominate the political discourse for the next few years as businesses, unions, representative organisations, central and local government and others assess the consequences for a new system of governance outside the EU.
To a large extent much of this is out of our hands. However, as the organisation representing you and your business we are committed to being an effective advocate for your interests in the debates that take place, and any future regulatory changes that follow.
To this end we will:
- Ensure resources are redirected to influencing decision makers involved in shaping the future of the UK outside the EU
- Produce insight that helps members understand the potential consequences of this historic change
- Create events to debate and share intelligence on how the industry should respond
- Remain positive about our sector, the UK economy and the regulatory environment we operate within in public statements
- Collaborate with other organisations in these aims
Maureen Hinton, global research director at Verdict Retail:
"The historic vote to exit the EU has put much of the UK in a state of shock, and retailers must now be prepared to deal with a high level of volatility, in both supply chain costs and consumer confidence.
Consumer confidence will be very fragile during a prolonged period of political instability, as the timetable for the exit from the EU is clarified, and the fall out in the main political parties comes to a head, with the possibility of a general election also looming.
Consumers will be wary of making big financial commitments, such as buying houses, until they have more confidence in their own personal economic prospects which will hit the sale of big ticket items in the home related markets.
Heavy share price falls at housebuilders already point to market concerns over house price falls and a slowdown in the number of transactions, which would lead to a contraction of sales at home related retailers.
The pound’s sharp drop today, with fears that it will weaken further, will increase costs to retailers of importing goods.
While retailers may have currency hedges and contract terms already in place with suppliers which will delay the impact on shop prices, they will not be able to hold prices for long.
Following the exit from the single market, there could be costly tariffs in place should the UK government fail to negotiate beneficial trade agreements, which will put further upward pressure on prices.
Retailers must encourage consumers to spend now ahead of such rises, but that will be hard in the circumstances.
The UK population has become well used to austerity since the recession, so retailers will not see a huge change in consumer behaviour, but a further continuation of the challenges they have been facing over the past few years.
When so few predicted the result, it is hard to take any of the immediate longer term forecasts about how Brexit will impact the economy with anything other than a very large pinch of salt.
However, we would expect that any curtailment of freedom of movement of EU nationals coming to the UK will have some impact, given that so many are currently employed by retailers.
This constraint to labour supply may push wages up, though this impact may be mitigated by retailers cutting down on staff, in a bid to rein in the increased costs of goods in their supply chain."
Statement from Morrisons:
“The country has made an important decision and, as a British company, our job is to serve our customers well in all circumstances. There will now be a period where the Government negotiates the terms of our exit from the European Union and, as the implications become clear, we will continue to listen to our customers, colleagues, suppliers and shareholders as we lead the turnaround of our business."
Ann Summers CEO Jacqueline Gold, in comments published in Retail Week:
“The nation has woken up to the biggest travesty ever with a potentially massive fallout.
We already have barriers on the high street with rents and business rates and we now have another one. Nobody knew what Brexit would look like, which is why Leave is the most dangerous thing for retailers.
We’ll be swamped with admin. We want to be trading and driving our business forward and this is stifling all that.
All this is doing is adding more uncertainty and distraction from running our businesses.
If costs go up as a result of a weak economy and a weak pound and sales go down then obviously that isn’t a good formula for all of the things that matter, whether that be pricing or jobs.
I will do everything I can to make sure none of those things happen, but the world is not going to be the same as we’ve known it for the last 40 years.
It’s very important we continue to have access to the single market, but it’s not like you can cancel your gym membership and rock up on the treadmill the next day.
We will have to make compromises and there will be a premium to pay.”
Statement from Sports Direct:
"Following the outcome of the referendum, Sports Direct notes the associated market volatility and in particular material changes to sterling/dollar exchange rates, and the lack of transparency as to those rates in the short to medium term. These factors are likely to impact purchases for which the company is currently not hedged for the FY17 period and beyond."
Nigel Oddy, CEO of House of Fraser
“It has gone against what the pollsters said but it is too early to say what the impact will be on our industry and the business. All we can do is open the stores today and assess over the coming days and weeks on the impact it will have.”