Monday, 11 October 2021

The Fashion Industry and Brexit - What’s the Story?

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Depending on which side of the political spectrum you sit, the recent fuel shortages and supply chain issues on these shores are either driven primarily by Brexit or have little to do with the UK’s decision to leave the European Union.

As usual, however, the truth sits somewhere between these two extremes, with Brexit one of several factors that have combined to create a perfect storm in the UK’s retail and fashion sectors.

 

However, Brexit is also an influential trigger, so what steps can retailers and designers take to negate the ongoing impact of our exit from the EU going forward?

Brexit and the Fashion Industry - A Snapshot

If you look at the wider private sector in the UK, you’ll see that small and medium-sized businesses comprise 99.3% of total ventures in the private sector.

This trend is largely reflected in the fashion industry, where SMEs account for 99.68%of the UK’s £35-billion fashion industry.

Interestingly, the fashion sector is also a deceptively large contributor to the UK’s gross domestic product (GDP), accounting for 1.6% overall.

However, this share has fallen in line with the UK’s wider GDP value since Brexit, as the region’s departure from the EU continues to cast a significant shadow over the 52,000 fashion-oriented businesses that drive the industry forward.

More specifically, a recent survey conducted by the UK Fashion and Textile Association found that 98% of businesses are struggling with increased bureaucracy as a result of Brexit, while a further 92% are struggling with higher freight costs as they start to deal with markets further afield.

One particular fashion retailer revealed that their sales distribution has changed markedly as a result of Brexit, as while they used to rely on Europe for 30% of their revenue, they now derive 80% of their turnover from the UK and the US.

Overall, 74% of fashion brands on these shores are experiencing increased general costs associated with Brexit, which in turn is squeezing margins and damaging bottom lines across the board.

How to Thrive in the Wake of Brexit

To cope with such changes, fashion brands need to be proactive in their approach, while following a number of tried, tested and universal rules that can help to future-proof even the most vulnerable businesses.

For example, listening to new customers and meeting their expectations is imperative, as this will help firms to maintain a reliable and loyal customer base at all times. It’s also important to get their pricing right, as you look to cover any increased freight or administration costs while maintaining price points that the market can bear.

We’d also recommend securing fixed contracts to regulate the price of raw materials, which can help to negate widespread and often volatile currency price movements.

In this respect, deciding to trade futures and enter into a contract with suppliers can help to regulate costs and optimise future margins, which may prove crucial for fashion brands in the near and medium-term.