Retailers and consumers across the UK continue to face uncertainty as they weigh up the impacts of Brexit. Seven experts give their view.

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The immediate aftermath of June’s shock vote to quit the EU brought political uncertainty and sparked a downturn in consumer confidence, although figures revealed this week that total retail sales growth in July was the best since January. But longer term factors such as costs of sourcing and new trade tariffs remain more of an unknown.

Here, Retail Week rounds up the opinions of experts from the KPMG Ipsos Retail Think Tank.

James Knightley, senior global economist, UK and US, ING:

“For the retail sector, the plunge in sterling is bad news. While most companies will have implemented some currency hedging, the cost of imported goods will rise substantially at a time when increases in the living wage are adding to business costs.

“We have already seen petrol prices rise because of sterling’s plunge and we are likely to see this trend intensify. This will erode household spending power, while also pushing up retailers’ distribution costs.”

David McCorquodale, UK head of retail, KPMG:

“In the immediate, shorter term, key considerations for retailers are customers, currency and consumer confidence. Customers are the voters and many retail CEOs, particularly for the large national chains, have been careful not to take sides in public pronouncements for fear of alienating their brand.

“Currency presents a challenge, with the pound having weakened after the vote. While this is not an immediate worry for retailers as most hedge their currency exposure, the cost of goods purchases overseas will effectively become more expensive as hedging unwinds – unless, of course, the pound strengthens.

“For retailers the crucial decision will be whether to increase prices in this price-conscious, competitive environment, or to absorb the loss into their margin. Those with significant overseas revenues will benefit in this case.”

Martin Hayward, founder, Hayward Strategy and Futures:

“The effects of the vote on the retail sector will take time to play out as we are looking at a likely two-year transition process to Brexit. Stocks and the pound are flailing around in the immediate uncertainty, but we can make a few early inferences.

“Provenance will be even more important – the opportunity, and legal permission, to promote locally sourced goods over imports adds extra impact to an already important trend in food and general retailing.

“Local recruitment and staff training may become more important as migration is controlled. Greater competition for staff may in turn increase wages, and prices, but this will then stimulate sales elsewhere and allow Government support for the low paid to be invested more productively.”

Maureen Hinton, Verdict:

“There are five major factors affecting retail as a result of Brexit. In the short term a weaker pound, fragile consumer confidence and political uncertainty, while in the longer term the prospect of higher tariffs with trade restrictions, plus a far more limited labour supply.

“The UK population has become well used to austerity since the recession and will retain the same habits, but will be more wary again of making big financial commitments, such as buying houses, until they have more confidence in their own personal economic prospects.

“In the short term, it is political uncertainty that is a major factor for retailers. Not only is it a drag on consumer confidence, but also it prevents retailers making concrete business plans.

“Until they know how the UK Government intends to tackle the issues around the exit from the EU, there is little retailers can do apart from consider every eventuality.”

Mike Watkins, head of retailer and business insight, Nielsen UK:

“At times of uncertainty, consumers look to home and family for support networks, which means that in the short term retailers will need to reinforce the message that they are here to help, be it through good prices, customer service or the overall shopping experience.

“In the short term retailers will need to reinforce the message that they are here to help”

Mike Watkins, Nielsen UK

“In the short term we can expect shoppers to look to save more or pay off debts rather than increase discretionary spend and this could have a ripple effect on many retailers.

“In the medium term, as the impact of any change to monetary and fiscal policy becomes clear and are felt by shoppers retailers will need to accelerate changes to strategies already in place.

“These need to include simplification, address overcapacity as the result of multichannel shifts in spend, better analytics, innovation in service and product that gives real benefits and, of course, continually revisit what ‘value for money’ means for loyal shoppers.”

Jonathan De Mello, head of retail consultancy, Harper Dennis Hobbs:

“Should a soft landing fail to happen, retail in the UK will be a less exciting place as domestic retailers halt or slow expansion within the UK in order to necessarily focus on considerable cost pressures derived from a combination of higher import costs due to the decline in the value of sterling, and the national living wage.

“International retailers will similarly seek to reduce their exposure to the UK, and the UK’s status as the principal foothold for US brands seeking to enter the European marketplace will be threatened, given the UK would be subject to standard EU barriers to trade.

“Brexit would make Paris – London’s only major competitor from a retail perspective – more attractive, albeit London, particularly when Crossrail is up and running, will still be considerably ahead from a retail spend perspective.”

James Sawley, head of retail and leisure, HSBC:

“For many operating in the more discretionary end of the wallet, a strategic decision will have to be taken on pricing. With cost pressures also mounting in areas such as staffing, transport and energy costs, businesses have tough decisions to make which effect both customers and shareholders.

“Retailers with healthy balance sheets and healthy margins can afford to play the wait and see game, keeping prices the same in order to protect or gain market share.”