In the event of a no-deal Brexit in March 2019, a new survey has shown that over a third of retailers indicated they feel ‘very underprepared’ for a hard Brexit, and are considering stockpiling where possible.
Squire Patton Boggs and Retail Economics undertook a survey in which the majority (52%) of retailers said they had done ‘some preparation’ and just 15% indicated that they ‘feel very prepared’.
Retailers have said they are considering ‘a wide range of mitigating factors including stockpiling where possible; different routes across the Channel; signposting support for EU workforce; and currency hedging’.
The top three concerns were: (1) supply chain management and logistics issues (67%); (2) Labour availability and cost (56%); and (3) tariff costs (48%).
Almost a third of retailers (32%) said they would face ‘significant additional costs’ in the event of a no deal scenario, and all of them suggested that a no-deal would have detrimental impacts on sourcing costs.
Nevertheless, when faced with additional trading challenges, over half (59%) suggested that they had identified ways to partially mitigate new costs.
Matthew Lewis, partner and head of Retail, Squire Patton Boggs said: “We work closely with a large number of retailers across food, and the survey results echo the same significant concerns we have been hearing from the industry.
“Retailers are considering stockpiling and changing supply locations as ways of mitigating the impact but they all recognise that increased costs are inevitable.”
Richard Lim, chief executive, Retail Economics said: “It’s awfully concerning that over a third of retailers have done ‘little to no preparation’, or feel ‘very underprepared’ for a hard-Brexit, when this scenario could unfold early next year.
“Retailers identified disruption to supply chains, labour availability and tariff costs as their three biggest concerns of a no-deal, yet just two in five said that they had identified any way to mitigate against these additional costs.”
Lewis concluded: “The debate about the Withdrawal Agreement continues in earnest, as does the uncertainty all this brings. The actual outcome should become clearer within the next few weeks.”