A prolonged period of low consumer confidence following the decision to leave the European Union means it’s “likely” we will see further high street casualties in the coming months, according to industry observers.
Closing down Sales
Increased costs for both consumers and retailers, along with years of uncertainty as Britain negotiates its exit from the EU, will mean trading patterns will be difficult to predict, said Jeremy Cooper, head of retail at accountancy firm Crowe Clark Whitehill.
“The big fear for retailers is how the uncertainty over the next few years will impact on consumer sentiment. Coming on the back of the introduction in the living wage, we are likely to see further casualties on the high street,” he said.
Retail analyst Richard Hyman predicted “mayhem” as retailers are left in the dark about the future in terms of trade with the EU.
“The net impact is that consumers will be less well off and have less money to spend,” he said. “For clothing in particular, an already massively-squeezed market will be under greater pressure if consumers have less money to spend; and they will indeed have less. Doing business will be more costly - the EU can’t allow a member country to leave but enjoy all the benefits of staying.”
Helen Dickinson, chief executive of the British Retail Consortium, said: “Keeping the cost of goods down for consumers and providing certainty for businesses must be at the heart of the Government’s plans for life outside of the EU.”
Shopping centre organisation BCSC acting-CEO Edward Cooke said the result is “clearly disappointing” for those in both property and retail and comes at a time when “we should be encouraging more international and European investors and retailers into the UK”.
“But change won’t happen overnight. The prospects for the wider economy and consumer confidence will now depend in part on negotiations over the UK’s new status,” he added. “We hope those negotiations happen quickly and effectively to create the right conditions for the retail sector to continue to deliver employment opportunities and invest in UK towns and cities, contributing to local economies and communities.”
Mark Robinson, property director at shopping centre Ellandi, said: “We have concerns over investment perception; uncertainty is generally bad for investment. However we have quite a deliberate focus on needs-based shopping rather than want so we will be less affected than perhaps some others.”
Verdict Retail director of content Patrick O’Brien also warned retailers to prepare for “a period of high volatility”
“Consumer confidence will be very fragile during a prolonged period of political instability. With import costs rising with the fall in the value of the pound, prices will rise, and many people will put off big ticket purchases until they have more confidence in their own personal economic prospects.”
British Fashion Council CEO Caroline Rush said the organisation would continue to support the fashion and creative industries whatever changes lie ahead.
“There was an overwhelming support from our designer survey for the UK to remain in Europe and there will no doubt be upset and dismay at today’s result that will prompt an outreach to our friends, partners, business colleagues in Europe,” she conceded.
“We now have a role to play in keeping Government updated on our industry’s priorities and keeping the designer community updated on any likely impact to business as our country prepares to leave the EU over the coming years.”