Retailers express currency doubts over Brexit

Clive Daley, director at retail consultants mdj2 associates, says exchange rates are the biggest concern among retailers.

With the EU referendum a little over six weeks away, retailers and suppliers are busy assessing the potential trading implications of a Brexit vote says Clive Daley, director at retail consultants mdj2 associates.

He said: "Recently we have been getting calls from retailers who are considering their strategy in case of a Brexit vote.  Clearly there are many unknowns, however it is becoming clearer that there are several factors which could affect retailers and their suppliers, especially in the short to medium-term.  

"The main concern seems to be around currency exchange rates, where a predicted drop in the strength of the pound, specifically against the dollar, is likely to be felt the quickest.  We have already seen the pound match its weakest point since 2009, which was when David Cameron announced that the UK's EU fate would be decided by an in-out vote by the people, and experts predict Brexit could wipe a further 20 per cent off the sterling's value.  As a result purchasing product from the Far East would become rapidly more expensive.  China factories are unlikely to help with lower costs as they have their own challenges with increasing labour costs and some raw materials.  A drop in the dollar exchange rate is also likely to see an increase in supply chain costs for retailers and suppliers as the cost of oil would rise, in turn pushing up diesel and petrol prices.

"For many garden centres and nurseries there is a greater exposure to the Euro exchange rate, which is also predicted to drop in the event of Brexit, especially through their relationships with Dutch nurseries.  

"A Brexit vote could also have implications, although perhaps not in the short-term, for many garden centres and suppliers relating to their workforce, as many businesses, especially production nurseries and fruit farms employ large numbers of people from across the EU.

Daley added: "As the various polls suggest the vote could still go either way, but garden centres and suppliers need to spend time over the next month getting a good understanding of the potential implications of Brexit, and building a plan so that they can respond and adapt quickly to any short-term implications."

Meanwhile, the British Independent Retailers Association (BIRA) says when asked 'Should the United Kingdom remain a member of the European Union or leave the European Union?' members said:

· Remain a member of the European Union - 38.62 per cent
· Leave the European Union - 32.93 per cent
· Don't know - 28.46 cent

The HTA has declared a neutral position after 169 members responded to a poll and gave no overall majority to stay or leave.

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