Brexit: Garden retail

Opportunities

- Fewer holidays meaning people spend more time in the garden, potentially growing more plants, including fruit and vegetables.

- Fewer people moving house, so potentially spending more cash on their gardens.

Challenges

- Higher prices of manufactured goods and raw materials caused by strengthening of the dollar.

- Potential labour issues as overseas workers return home or are more difficult to recruit as the money they earn in the UK is worth less overseas, or they have visa restrictions imposed.

- Gardman chief executive officer Pete Utting said the cost of goods sold in garden centres could rise 15 per cent post-Brexit. Impact on cost base is "pretty drastic" thanks to the pound weakening after the referendum vote to leave Europe, he explained. A second, less quantifiable issue is impact on workforce from the EU, particularly in warehousing, he added.

Comment

Garden industry specialist Ian Riggs

"In garden retail, unless currency, the exchange rate was covered forward extensively, then imports almost universally paid for in dollars will cost more, and so will freight. This will reflect in higher cost prices, then higher retail prices, which could be countered by lower margin expectations by retailers. But this scenario is unlikely. This will affect everything from solar lights to garden furniture and a huge range of gardening products and ranges. I can see problems in those businesses that rely heavily on labour from the EU or overseas, especially those staff that work in the UK to transfer funds back to families in their country of origin. In effect, their wages and funds sent home have fallen in value - currently about five per cent, pound against euro - although this is partially offset by the phased increases in the National Living Wage."

Notcutts chief executive Nick Burrows

"Like others, our main areas of Brexit planning at this stage are around our supply base and currency movements."

Coolings business development manager Neil Jackson

"Historically speaking, a bit of a recession is a benefit to our industry. People don't change cars or go on foreign holidays or move house and they spend more time in the home and garden. There's nothing about Brexit that worries us. The pound will settle higher than it is now in the next few weeks so it's too soon to draw any conclusions. A lot will depend on EU tariffs, which may mean plants may not be cheaper. Tariffs tend to be used like-for-like at three per cent on average so that may mean little difference in prices."


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