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The impact of Brexit on retail forecasting for Spring/Summer 2021
By Lara Bonney, The Tapestry Agency
With just over a month to go until the end of the Brexit transition period, the implications of the new regulations – and resulting disruption – are quickly hitting home for many brands. According to the NAO’s latest report, preparations for the new border controls were already rated as “high risk”, and have been further forestalled by the pandemic.
F
or multichannel retailers, the challenges of forecasting for Spring/Summer 2021 are two-fold. Firstly, they need to consider
whether and how the immediate effects of Brexit – i.e. import delays and restrictions – will impede retail sales in the new year.
Secondly, what will happen to the multitude of customers who switched from bricks-and- mortar to online following the first lockdown, and to those who are set to purchase online at Christmas? Will they come back for more in Spring/Summer 2021 – or will their shopping habits change again – and how can retailers retain these customers? To answer these questions, we spoke to 20 multi-channel retailers across the UK.
Trouble at the border: containers are up, trailers are down In line with reports of UK border controls being unable to cope in the run-up to the new rules, the retailers we spoke to have also experienced a number of issues at specific ports such as Southampton and Felixstowe. It seems that the issue of insufficient customs agents due to the pandemic will be likely compounded by 40 per cent-70 per cent of trailers – according to the Government’s worst- case scenario – being unprepared as they enter UK ports on 1st January.
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Festive shopping and increased volumes of PPE consignments are also adding to the delays. What’s more, once goods have arrived in the UK, retailers are struggling to source UK couriers that can respond quickly enough, as they are increasingly redeployed in other areas, such as fulfilling online grocery orders during lockdown.
Increasing tariffs put pressure on profit margins It is not only air freight tariffs that have soared, and indeed doubled in some cases. Many retailers who have turned to road haulage and shipping as an alternative are now facing new UK surcharges, and increasing shipping charges to boot. As well as having to budget for higher import tariffs, they also have to navigate the new VAT rules. For instance, the VAT on goods under the value of £135 (and therefore exempt from customs duty) will no longer be collected at the point of entry to the UK, but at the point of sale.
The documentation of goods will become more complex, with retailers needing to declare the exact contents and value of each parcel, as well as a full tax breakdown (i.e. how much, when and where the duty has been paid). Retailers will also need to make sure they have sufficient IT systems in place to deal
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