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No-deal Brexit stockpiling warning from suppliers

Fashion retailers and suppliers have warned that the government’s Yellowhammer document on the consequences of a no-deal Brexit could become “a self-fulfilling prophecy” by heightening anxiety and pushing people to stockpile.  

The document, published on 11 September, outlays the “reasonable worst-case assumptions” if the UK crashes out of the European Union without a deal on 31 October.

Key concerns for fashion retail include border disruption at Dover and other Channel crossings, which could last up to three months, and lorries being held for up to two and a half days at customs.

The government was forced to publish the document after opposition MPs voted to release them in the interest of businesses and the public.

“The problem with publishing [the document] is that you risk creating a self-fulfilling prophecy, causing stockpiling and, in the case of retailers, trying to bring in more stock than is needed, creating logjams,” one fashion industry veteran told Drapers.

Andrew Pace, director of supplier Panda Sourcing, agreed: “It strikes me as scaremongering. It could be the Millennium Bug all over again: it was billed as the end of the world [but] was just another day on the calendar. There may be some delay at the port, but all suppliers – and ultimately their buyers – will be in the same boat. The damage to the pound was done months ago but we have just had to get on with it.”

One supplier argued that the disruption would actually favour UK-based companies: “Confusion will reign but it’s going to be boom time for UK manufacturers,” said Jenny Holloway, CEO of London-based manufacturer Fashion Enter. ”Those using trading companies in Europe are going to have terrible problems with transportation. No one knows if they need a new EORI [European Union registration and identification] number and they’re saying you need an agent in every country – it’s still confusing. We’re having serious conversations with businesses that wouldn’t have considered us in the past who want to start trials.”

Nevertheless, suppliers importing from the EU may suffer from a no-deal Brexit’s vague leaving terms. 

Richard Stagg, director of manufacturer Volume Clothing, told Drapers that some of his clients were asking to work on FOB (free on board) terms, leaving the product in the EU until they know what is happening. This makes the stock the responsibility of suppliers, who would incur the tariff costs.

He added that Brexit planning was hindered by short deadlines: “How can we plan for this when we book stuff three months in advance? I’m concerned for [our clients] because they’re going to be left without stock.”

Paul Alger, director of international business at the UK Fashion and Textile Association, agreed: “The statement implies you can mitigate against these changes, but you can’t. How the Yellowhammer document came out has perhaps heightened anxiety. We have always known no deal would cause massive disruption.

“The impacts of Brexit are already being felt by retailers. No amount of planning is going to put money in the pockets of consumers,” he added.

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