For almost five years, talk of Brexit has dominated the news and divided the nation. Now, after a long period of negotiations, the UK has officially left the EU. As of the 1st of January this year, crucial new trade deals came into effect.
So how does Brexit affect retailers? The Brexit impact on retail is vast and still uncertain, but let’s look at what we know.
What is the trade deal?
First, let’s look at what the new trade deal means.
The trade deal in place is called the Trade and Cooperation Agreement (TCA). In short, the agreement means that Great Britain is no longer a member of the EU’s single market and customs union.
Before, Great Britain could trade with the EU without tariffs, border checks or lots of documentation. After Brexit, it now has customs borders with the EU in specific locations, and there are more rules in place.
On the plus side, the UK and EU have a preferential trade agreement. This means goods between the two won't be taxed. There are also no limits on the number of goods they can trade (as long as “rules of origin” conditions are met). On the downside, there is now a requirement for customs declarations and a change in VAT processes.
This is the case for England, Wales and Scotland. However, under the Northern Ireland Protocol, Northern Ireland will continue to follow many of the EU's rules regarding trade to have an open border with the Republic of Ireland, which remains in the EU.
There will be free movement of goods between Northern Ireland and the UK, which means that most goods trades can continue across the border without the need for inspection or restrictions.
However, there are new checks to monitor certain products (such as food) coming from Great Britain into Northern Ireland to ensure they comply with EU standards.
The Brexit impact on retail sectors
So what does this mean for retailers? This trade deal will affect retailers in different ways.
Some of the pain points include:
● The processes are more complicated. Many retailers will need to get used to new rules for importing and exporting goods to and from the EU and Northern Ireland. There will be a lot more paperwork and admin than before. This will be time-consuming, complex and may cause delays.
● It will be more expensive for some. Retailers that source their products from outside the UK will have to pay more to import their goods.
● Tariffs could well be introduced in the future that are not specified in the current arrangement.
● EU laws prevent some animal products from being exported, which will have a huge impact on certain retailers.
How can retailers adapt to Brexit?
Whether you’re an online retailer or a high street store, there are steps you can take to navigate Brexit.
The best way for retail businesses to thrive post-Brexit is to adapt. Here are some steps you can take to help your business:
● Consider changing to domestic suppliers within the UK to prevent cost and delays from trading with the EU.
● Ensure you’re fully up-to-date with government legislation and how it applies to your supply chain.
● Prevent delays by ensuring you have the correct paperwork.
● If you’re an online retailer, consider altering your business strategy to attract international customers (for example, from the US).
The Brexit impact on retail will no doubt be significant. Though talks of Brexit have lasted years, implementing the new rules has only just begun.
We are yet to see the full impact of Brexit within the retail sector. There is still a lot of uncertainty. However, the most important thing for businesses owners is to understand the new trade rules, keep up-to-date with changes and adapt business strategies accordingly.