Retailers fear further depreciation of sterling and disruption of deliveries in the run-up to the all-important Christmas trading period, if the UK leaves the European Union without a deal on 31 October.
“Operation Yellowhammer”, the government dossier leaked at the weekend, revealed that the UK could face up to three months of disruption at its ports after a no-deal Brexit.
“The leaked documents confirm that the impact of Brexit will be much worse than the picture the government has been painting,” one brand managing director told Drapers.
“The biggest worries continue to be the weakness of our currency impacting on prices and fears that our flow of goods inwards will be massively disrupted.”
Another retail managing director agreed: “The killer has been the currency devaluing over the past few years. We’ve had to revaluate every element of our sourcing and move away from markets where we had good trading relationships.
“We’ve moved a lot of our core product manufacturing into Bangladesh as a necessity. It means we have to buy much bigger volumes and sit on stock for longer, so we’re not as lean as we were. We’ve reacted that way to defend margins. If we hadn’t made that move, we would have gone [under].”
Marlon Kistensamy, supply chain consultant to high street retailers, told Drapers the predicted port disruptions could have a “dramatic effect” on fashion retailers: “Retailers are streamlining processes with their freights and parcel carriers, and are identifying possible products for buffer storage. However, [port disruptions] could have a dramatic effect, especially with systems that have not been tested, and the added impact of the lead-up to Christmas.”
One chief executive agreed: “We’ve done a lot of sums to work out what a hard Brexit would mean for us, and it’s not looking pretty, even in the best-case scenario.
“We did some stockpiling for the last [expected date] for Brexit [29 March] but usually you’re ordering six to nine months in advance and this has all happened within a matter of weeks.”
However, one former retail CEO was critical that “fashion retailers have adopted the ‘ostrich’ approach” to Brexit preparations: “As a nation, we always search for the gloomy outcome, but even thinking that way hasn’t made the fashion industry adequately prepare,” she told Drapers.
”There are unknowns but good planning will militate against those. Next has moved its imports to a variety of ports away from just Calais. Some retailers have opened European logistics operations or are using those of their freight forwarders. The government could easily remove the number of checks through UK ports for a limited time if queues do build up.”
- How are you preparing for Brexit? Email us at email@example.com