One year on, the outcome of the Brexit vote has left uncertainty in its wake, but an indisputable consequence has emerged: the value of sterling has fallen.
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UK brands have subsequently found themselves in a position to take advantage of the growing interest from overseas markets arising from the drop in the strength of sterling.
Jenny Holloway, chief executive of UK manufacturer Fashion Enter, says there is “no better time” for brands to export, providing they keep their fabric cost base under control: “It’s one silver lining in the uncertain retail and etail trading environment we’re currently in.”
“We have brands that are definitely capitalising on the weaker pound. We have clients selling into Europe and the Middle East that are now placing larger orders for autumn and Christmas.”
A game of two halves
British outerwear label Lamler is one of the brands gaining in confidence – and gaining in popularity with Asian buyers in particular – as pricing becomes “more palatable” as a result of the weakened pound.
However, founder and creative director Helen Plummer describes the current climate as “a game of two halves”: “Even though our coats are manufactured in the UK, we source a small amount of our fabrics and trims abroad, so costs are higher on that front,” she explains.
“It’s an interesting minefield. But I think any British brand will see buyers question prices a little less.”
Meanwhile, Lamler is among UK brands finding more business opportunities abroad, rather than at UK-based trade shows. Plummer says the brand exhibited at the Designer Showrooms space at London Fashion Week for autumn 17, but it does not plan to do the same next year unless it gains the opportunity to put on a presentation.
“We launched in London and Paris, but we have found London isn’t right for us at present,” she explains. ”In contrast, we’ve found many more business opportunities at events abroad – we were just at Pitti in Florence – and have had interest especially from Japan.”
Minimise foreign exchange risk
As UK brands become more appealing to overseas buyers, they will look to boost their exposure in these markets to gain more foothold.
Holloway advises brands to keep a tight rein on costs and improve public interaction: “High street sales are tough at the moment. My advice for brands is that they should stay nimble, keep looking at ways of cutting costs, and proactively engage with social media and quality press to push their marketing messages out to more territories.”
However, those tempted to place their bets on hedging far in advance on the back of growing international demand will need to tread carefully.
Tony Evans, managing director at British footwear group Jacobson, warns it is “dangerous” for businesses to hedge too far ahead – it is something he has tried to avoid.
“For me, currency is currency,” he says. “I think the weak pound is a short-term opportunity. Currency fluctuations are a big risk for brands – you can be selling products at one price and then find that the rate moves when you’re going to production.”
Evans adds: “What we need is consistent currency – it doesn’t matter where the pound is against the euro, as long as it is consistent on a long-term basis.”
Paul Alger, director of international business at the UK Fashion and Textile Association (UKFT), agrees: “I think many are using the weakened pound to full advantage, but they need to be careful about hedging currency on products that aren’t made in the UK [as they are susceptible to changing rates].
“They must be nimble about it, and take risks out of the equation – be proactive, rather than reactive.”
Bring in more pricing options
The UKFT’s Alger believes brands should offer pricing quotes in euros or dollars to secure long-term business.
“We have been recommending this so retailers can be reassured they are not dealing with costs they won’t be able to afford in one or two years’ time,” he explains.
Alger admits that companies are “only just beginning” to warm to this idea: “It’s a delicate balancing act because on the other hand, you don’t want businesses to price themselves out of the market. But it takes the risk out of buying for those based in continental Europe in particular.”
He also suggests that businesses include many currency and language options on their websites, as well as shipping and payment options.
While UK brands enjoy the benefits of the drop in the value of the pound without much change in the rules as yet, it is worth bearing in mind that sterling’s value remains volatile as long as Britain’s trade arrangements hang in the balance. It is paramount for brands not to stray from strict risk and cost management, even if the full effect of Brexit has yet to be felt.