Consider yourself forgiven if you’re having a little trouble keeping track of exactly where we are with this whole notion of Brexit — the UK’s peripatetic effort to leave the European Union.
Every other day seems to bring a new vote (apparently not today, though) and as of this moment it appears Great Britain will either leave the EU with an amended, negotiated settlement; leave the EU without any agreement or guidelines; delay leaving the EU while an agreement is worked out; or not leave the EU at all. Whether Parliament can even vote on a Brexit agreement again is the latest question being raised.
Does that help?
The confusion and uncertainty, of course, is not without its consequences. We’ve been writing for some time about retailers and the havoc that not knowing what’s next is wreaking. And it seems the situation is not getting better. We talked with UK retail consultant Natalie Berg earlier this year about the challenges that come with Brexit uncertainty. Berg, founder of NBK Retail, shares some of her thoughts in the brief video interview below.
Berg points out that the unknowns surrounding Brexit are causing something of a double whammy, to use the technical economic term. Consumers who feel anxious about not knowing where things are heading tend to pull back on spending. And retailers, also unsure of what form Brexit will take, are stockpiling inventory as a hedge against possible restrictions on the movement of goods in a reimagined Europe.
She points to the slower than usual holiday shopping period that the UK just experienced — never mind that spending perked up a bit in early 2019. The combination of a slow holiday period and the move to bulk up on inventory could leave retailers in a tough spot once the Brexit dust clears. In holiday seasons past, U.S. retailers have cited excess inventory as a serious hit on profit margins. As CNBC retail writer Lauren Thomas reported late last year:
“The holiday season can make or break a retailer, depending upon if the company has too much inventory left over heading into the New Year. Retailers can, in turn, be forced to use heavy promotions to get rid of excess merchandise, which can weigh on profit margins for quarters to come.”
For now, though, with Brexit looming — or not — UK retailers might be placing inventory overload down their list of worries. Their focus this week will be on Parliament and on working to determine what the series of votes, or lack of votes, will mean to their businesses.
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