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Third of retailers to 'shake up' supply chains post-Brexit vote

Almost a third of retailers (30%) are considering changing suppliers and 28% are considering sourcing from different countries following the UK’s vote to leave the European Union, according to new research from Barclays.

The UK, Asia and Africa could stand to benefit as sourcing destinations, found the report, which was produced in collaboration with retail research agency Conlumino and based on a survey of 68 retail decision makers last month.

“As with other parts of the retail industry, the fashion sector has been hit by a range of increasing cost pressures over the last 18 months,” said Ian Gilmartin, head of retail and wholesale at Barclays.

“Increasing consumer demand for fast fashion and rapid delivery has resulted in many clothing retailers looking to European manufacturers, often sourcing individual elements of garments from different EU countries.

“Our survey shows that following the vote to leave the EU, sourcing from non-EU countries may grow in popularity, perhaps due to uncertainty around tariffs and trading agreements with the EU.”

Gilmartin pointed to encouraging news for British manufacturers as some retailers indicated they expect to bring supply chain activity back to the UK.

“The currency moves since the referendum make this option more attractive for retailers, and it may also help them reduce lead times, with sourcing closer to home allowing brands to react more quickly to spikes in demand and challenges posed by unseasonal weather,” he added.

Four out of five retailers (81%) said they expect a negative impact from exchange rates, while 70% said they are reviewing currency hedging following the vote.

Just under a third (31%) said they expect cost changes to result in price increases for consumers, with the rest said they would look to absorb the costs.

 

 

 

Readers' comments (3)

  • I can understand more UK production but with the pound being so weak retailers won't switch more to Asia. They will just do what they always do-squeeze the factory or the importer.

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  • The retail have virtually destroyed UK Manufacturing and the skills have rapidly disappeared again. Even after the hype 3 years ago when 'Made in Britain' became the trend, retailers soon lost their bottle and went running back offshore for price and not quality. NEXT were one of the worst culprits. Shake Up supply chain means squeeze the supply chain.

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  • A shake up may well be desirable. But how feasible?

    First there is the need to plan an exit from existing agreements in order not to damage the brand and avoid being in breach of contractual obligations.

    Second is the need not only to put new agreements in place, but also to ensure that the correct auditing and compliance checks can happen.

    So by all mean shake up, but take care.

    Stephen Sidkin
    Fashion Law Group
    Fox Williams LLP

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