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BREXIT: Retailers Must Prepare For A Period Of High Volatility, Says Verdict Retail

By Steve Wynne-Jones
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BREXIT: Retailers Must Prepare For A Period Of High Volatility, Says Verdict Retail

London-based retail information firm Verdict Retail has said that the Brexit vote means that retailers should anticipate a 'high level of volatility' over the coming weeks, both in terms of consumer confidence and supply chain costs.

"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," said Verdict's global research director, Maureen Hinton.

"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."

For importers, the pound's sharp drop in the wake of the vote will increase costs, she added.

"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.

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"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."

© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.

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