As the clock ticks into a pivotal month for the future of the UK and its economy, retailers could be forgiven for feeling far from optimistic.
In just three weeks’ time, either Boris Johnson or Jeremy Hunt will take charge of the Conservative Party – and the keys to 10 Downing Street.
But neither leadership candidate has cut the most reassuring of figures for business when it comes to Brexit and its implications.
Hunt sparked anger at the weekend when he suggested he would tell any businesses that went bust as a result of a potential no-deal Brexit that their sacrifice would be worth it.
“Johnson claimed he will ‘save the Great British high street’, though his bold statement lacked the policy detail required to make good on such a promise”
And Johnson has come under fire for his “f**k business” retort – a statement to the Belgian ambassador last year that has returned to haunt him as his policies come under scrutiny during the leadership contest.
Both candidates have attempted to paper over some of the cracks caused by their respective comments – and there are a few glimmers of hope for retail.
Hunt has alluded to plans to cut business rates and corporation tax, should he be elected as the next Tory leader. Johnson, meanwhile, has claimed he will “save the Great British high street”, though his bold statement lacked the policy detail required to make good on such a promise.
Despite retail’s ongoing travails, despite the industry’s status as an employer of 3 million people and despite its role at the heart of communities up and down the country, it is an industry that continues to gain little more than a footnote in the policies of the two PM hopefuls.
As October 31 looms ever larger, and with both Johnson and Hunt vowing to leave the EU on Halloween come what may, retailers great and small could be in for a fright.
It is a nightmare that has already begun, though. Privately, at least, retailers fear the UK’s impending exit from the EU is having a deeper impact on their businesses than what is suggested by much of the public narrative.
“One chief executive told me last week trading was ‘as tough as I’ve ever seen it’”
One chief executive told me last week trading was “as tough as I’ve ever seen it” and suggested he “wouldn’t be surprised” if the coming months brought more profit warnings from listed retailers.
Although a damp start to the summer won’t have helped sunscreen, shorts and sausages fly off the shelves, he pinpointed consumer confidence – “at a much lower ebb than many people think” – as the main factor behind the current sales slowdown.
Indeed, shopper sentiment tumbled in June, according to the latest GfK figures, as political and economic uncertainty persists. Footfall is on a similar downward trajectory, while there are signs that even online sales growth is starting to plateau.
Many could be forgiven for battening down the hatches as the storm rages on. But the retailers that succeed in the longer term will be those that prepare best for an uncertain future.
If support and sympathy in navigating the industry’s challenges aren’t in the offing from our new prime minister, then retailers must be prepared to help themselves.
Britain’s biggest retailer, Tesco, is leading from the front. Boss Dave Lewis warned last month that an October Brexit would be “challenging” for retail, with any excess space in warehouses to stockpile likely to be at a premium at a time when seasonal Christmas stock takes precedence.
But with grocery supply chains expected to come under huge pressure after October 31, Tesco is working closely with suppliers to ensure shelves remain stocked.
At an event last week, the supermarket giant detailed how it is taking more of the crop from its potato farmers, for example, with vegetables not aesthetically good enough to be stocked in-store being passed on to other supply partners to make mashed potato for ready meals.
The Brexit impasse has arguably been one of the driving forces behind grocers’ desire to take that a step further and give greater consideration to the future of food – what Brits will be eating and where and how we will source it.
“Whatever October 31 brings, retail must be ready to go it alone without Johnson or Hunt in its corner”
Tesco is leveraging relationships with suppliers including Samworth Brothers and Hilton Food Group to drive innovation in plant-based foods that are not only easier to produce and source domestically but are more sustainable and less harmful to the planet.
Rivals are thinking in similar ways as they gear up for a post-Brexit world. Morrisons has beefed up its focus on locally produced goods like cheese and eggs, while Sainsbury’s has trialled edible crickets.
They are clear signs that grocers are thinking increasingly hard about the future of the food supply chain – and how it may be shaped by more stringent border checks and higher import tariffs in a no-deal Brexit scenario, as well as consumer trends.
Deal or no deal, retailers must follow their lead and face the facts: whatever October 31 brings, retail, sadly, must be ready to go it alone without Johnson or Hunt in its corner.
Leader: Retail must help itself on Brexit if new PM won’t
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Leader: Retail must help itself on Brexit if the new prime minister won’t