10 BDO LLP | RETAIL FORECASTS REPORT 2021
RETAIL CATEGORY GROWTH FORECASTS CONTINUED
BREXIT Since the UK voted to leave the EU in 2016 the expectations of what a deal between the UK and EU could be expected to cover has gradually diminished and at the time of writing a trade deal remains in the balance with signs that, even should one be struck, it may well exclude the most contentious areas.
Looking at the preparations the government has so far made, including a giant lorry park in Kent, it seems highly likely that 2021 onwards will see more administration and cost added to trading with EU countries, with only the degree of change from the previous status in question. DHL reports that checks at the port of Dover could increase from 500 to 10,000 per day based on number of trucks passing through on a busy day, and although a deal could yet lessen this increase, the new status quo will still represent extra time and cost for importers and exporters. Indeed, in November the National Audit Office reported that “although government departments have made progress in recent months … it is still likely that widespread disruption will occur from 1 January 2021”. Furthermore, while considerable arrangements may have been made in Kent to mitigate increased checks, there are many other ports across the UK that process substantial traffic and not all will have benefitted from the same levels of investment. Even for those retailers that largely import from outside the EU, delays at the border, as officials become tied up with new paperwork on EU imports and exports, will still present major challenges. Food & Grocery retailers are particularly exposed to hold-ups causing imported food to go out of date, while retailers within sectors particularly reliant on seasonality and trends, such as clothing & footwear, health & beauty and homewares, also face delays causing products to miss their windows of relevance to consumers. These retailers have had to look at sourcing and manufacturing more product locally, despite the costs, and have had to invest in speeding up and eradicating any slack in their supply chains. Meanwhile, retailers that are not as reliant on fast- moving trends or fast expiring products, such as those retailing large electricals and furniture, will need to adjust to building up larger stockpiles of goods and investing more in storage facilities.
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