The run up to the EU referendum involved plenty of speculation and debate, but little preparation for a possible Brexit. The reality is that few people saw this coming. As the result of the Referendum starts to sink in, what's next for retailers?
The first thing to mention is that, legally, nothing has changed. For now, we remain in the EU and there is no clear plan for exactly how Brexit will play out. However, clearly the impact of this uncertainty is already affecting retailers and there will be both opportunities and risks ahead..
Impact on sales
The most immediate risk is a temporary downturn in the economy as uncertainty affects both consumer spending on the high street and investment decisions. Retailers like Ocado and Next have also been quick to warn that the weakened pound will push up retail costs and cause prices to rise. It is however difficult to assess how long this will last and how serious the impact will be. The weakened pound may even be beneficial for some, providing favorable export opportunities in the short term.
The impact of Brexit on free movement of labour will be of major concern to retailers, many of whom rely heavily on EU workers, particularly in warehouses and depots. For some, allowing free movement will be an inevitable condition of having access to the single market, but others disagree. If the UK were to restrict free movement and introduce a work permit scheme, it will be harder to recruit and employers depending on EU workers will likely face staffing shortages. This shortage could push up wage costs, already increased by the recently introduced National Living Wage (set to rise to £9 per hour by 2020).
Some argue that any increase in wage costs could be countered by removing EU employment law red tape. However major employment law change is highly unlikely, at least in the short term. This is not least because many EU laws have merely built on rights that the UK already had in place (e.g. race and disability discrimination) and others have become workplace norms which are regarded favourably by most employees and employers (for example the right to paid holiday and family leave). You can read more about the impact of Brexit on employment law here.
Many UK consumer rights are already enshrined in UK law. While we would not be forced to adopt any new EU product standards, in reality any retailers supplying EU countries would still need to comply with these. On the other hand, we would be free to accept US or other overseas product safety standards, meaning that (provided the products do not have to cross into the EU from the UK), we could open up the UK as a market for goods from other countries.
Intellectual property rights that have been registered in the UK using the UK's Intellectual Property Office (including UK trade marks, patents and designs) will remain in force, regardless of Brexit. However, a significant part of trade mark and copyright law has been implemented through EU legislation, and this will need to be unpicked, depending on any deal following Brexit. Beyond this, the key development in IP is the likely exclusion of the UK from pan-European rights systems, which may result in UK laws diverging from those of Europe. You can read more about the impact of Brexit on IP law here.
Brexit has come at an already difficult time for retailers as many struggle with increasing competition and a downturn in consumer spending. For fear of stating the obvious, the key for retailers in the short/medium term will be consumer confidence and in the longer term will be the political outcome both within the UK and in negotiations with the EU.