As fears rise that a no-deal Brexit is now the most likely outcome of trade talks between the UK and the EU, Retail Week asks experts how retailers should be preparing for such a cliff-edge scenario. 

Paul Martin, UK head of retail, KPMG

paul martin columnist

Between Brexit and Covid-19, so many things are inherently uncertain. We’re in the Brexit endgame now and things are accelerating, but it looks as if we’re not going to get clarity until the last minute.

Retailers still have much work to do if they are to be prepared for every eventuality.

In my mind, supply chains are the key area that many retailers are still grappling with. If we take Covid-19 as a rather timely example, the businesses that performed best were those with robust resilience programmes already in place, either under the frame of strong business continuity plans or those that had hard Brexit planning in place, even prior to the emergence of the pandemic.

While some businesses, like grocers, passed with flying colours – showcasing their operational agility – so many others saw operations come to a grinding halt.

In fact, many retailers are still struggling to get their business back up and running, while others are trying to adapt to the new customer that’s emerged post-lockdown.

Businesses should invest less effort in trying to see around corners and place much more of their money, energy and time on preparing for what might emerge.

The stakes are arguably even higher for retailers, with the UK’s transition only in place until the end of the year.

Coinciding with Christmas – when many retailers make the vast majority of their annual sales – retailers can’t afford to be non-operational, especially after the woeful year they’ve just had.

David Potts, chief executive, Morrisons

David Potts

One of our major focuses has been on mitigating delays at border crossings. While we recognise there will be some delays at borders, we continue to look at alternatives to the crossing point at Dover and Calais, in particular.

We’ve also secured operator status that enables us to effectively get to what I sometimes refer to internally as ‘speedy boarding’. We’re not exempt from tariffs, but we are able to avoid many of the checks that may take place because we’re considered a trusted vendor. 

Over time we’ve also built up a predominantly British supply chain base. At the moment, two-thirds of what we sell is British, so we feel that we’re going to be in a good position. And we intend through local and British suppliers to continue developing that. 

The underlying point, though, is that our job is to provide for consumers across recession, across Brexit, across Covid-19, across Christmas and across every year.

From our point of view, representing British consumers, we’d like the government and leaders to negotiate a deal that includes no tariffs across the UK to mainland Europe and vice versa.

In the end, tariffs do drive inflation. Certainly, in any year, no one wants to see increased prices, but particularly in a recession year we don’t want to see that either.

Kyle Monk, director of insight, British Retail Consortium 

It is a testament to the sector that, throughout the current crisis, retailers have kept supply chains moving and proven a resilience and ability to adapt that many did not think possible.

It is wrong to believe, however, that just because retailers and suppliers coped with such a monumental shock over the last six months they will be able to adapt in the same way when we leave the single market.

They have coped so far, in part, due to relaxed border regulations and international co-operation keeping both supply chains and prices stable. This will be impossible when the current transition period comes to an end and with no deal secured.

A no-deal Brexit will result in the machinery of trade grinding to a near halt: increased transit checks, red tape and tariffs will inevitably push up costs and reduce the availability of goods for UK consumers.

“This cliff edge could not come at a more inopportune time, with retailers focused on preparing for the golden quarter”

Retailers have been working, and continue to work, incredibly hard to mitigate the disruption that is likely to arise. However, these barriers to trade, huge tariffs and supply chain disruption are beyond the control of any retailer.

This cliff edge could not come at a more inopportune time, with retailers focused on preparing for the all-important golden quarter. Warehouses will be at full capacity in the lead-up to Christmas, leaving little room to build up additional stock in preparation for the new year.

The government absolutely must prioritise securing a tariff-free deal, which minimises friction from non-tariff barriers, in time to allow retailers to prepare for these wide-ranging changes. Should they fail, it will be the British public who will pay the price next year.