Is it time to start buying British?

I read a fascinating survey from Barclays last week, with the snappy title "Supply chain considerations front of mind for retailers following Brexit". 

The objective of the survey was of course to identify retailer sentiment and see inside the mind of UK retailers as they begin to deal with the challenges and opportunities created by Brexit.

If you’d like to read the full Barclays press release (I recommend you do) click here.

Bearing in mind we’re still only six weeks into getting our head around the new world, some of the results of the Barclays survey were quite interesting: -

• Exchange rates are identified as a primary concern, with 81% of retailers expecting a negative impact and 70% currently reviewing currency hedging following the vote.
• 31% of those surveyed expect cost changes to result in price increases for consumers, with the remainder of retailers looking to absorb these costs.
• The majority of retailers 76% are looking to build more efficient supply chains, 30% are considering changing suppliers and 28% are considering sourcing from different countries. 

There’s no doubt inflation is coming in 2017 and one retailer has already been brave enough to put their head above the parapet and openly admit this.

This was Next, who in their trading statement last week, informed the city and investors that "the devaluation of the pound is expected to impact upon the cost price of goods, stating: "Although it is very early in the buying cycle, we currently estimate that cost prices in 2017/18 will rise by less than 5% on like-for-like products." 

Read the news story here - Next anticipates rise in cost prices as it reports on Q2 trading 

Click here to download the full Next Q2 trading statement.

With a large and still growing proportion of Home Improvement products sourced from overseas, the devaluation of the pound will shortly begin to have a noticeable impact on the profitability of retailers and suppliers alike. Passing on these costs to consumers will unfortunately become increasingly important as we move through 2017. The news that some retailers are intending to absorb these costs will make it very difficult for suppliers, many of whom are already operating on very tight margins. For retailers; keeping an eye on their competitor’s price movements will become a critical task if they are to maintain their profitability in the months and years ahead.

One of our largest retailer clients approached us recently and asked if we could start to track and record the impact of inflation on their major competitors' retail prices. As we already track the prices, promotions and reviews on over 500,000 home improvement products across 25 retailers, it was a case of letting our IT wizards out of their locked cages, feeding them full fat coke and muffins and seeing what they could come up with.

One of our existing reports is a summary of the price changes made in the last 24 hrs by the 25 retailers we track. However, this only tracks that a price change has occurred and doesn't record whether the movement was specifically an increase or decrease. I’ve got to admit, I’m starting to get bored with this article, so I shall jump to the conclusion - the good news is, that we’ve cracked it, we now have a new ‘inflation tracker’ that we’ve added to the suite of reports that we offer.

If your business is interested in pricing intelligence or you're currently trying to track retail prices manually, there really is a much easier way. Just contact us here.

Now to the heart of this week’s article: -

The positive news for the UK is that the Barclays survey identified that 32% of retailers predict that they are likely to purchase more products from the UK.

So let me ask you, yes you, the following question - are you one of them?

To quote Bananarama (something I do regularly) ‘It ain’t what you do, it’s the way that you do it’. Whether Brexit ends up a success or a failure for the UK economy is I believe totally in our own hands. With Brexit now a reality, either we can all sit back and be a spectator to what happens over the next 5 years or we can take action now and positively influence the outcome by directly encouraging UK investment and UK sourcing.

Great Britain is full of brilliant manufacturers and suppliers who have the capabilities to supply quality products and services at competitive prices, British Ceramic Tile and What More UK to name just two of them.

We’ve started to build a database of UK suppliers and manufacturers that we will pass on to our retailer clients, if you want to be on the list, just contact us here.

So if you’re a retailer, what's stopping you, isn’t it about time you started to buy British? 

If you're a manufacturer or supplier – if you’re not doing so already, I think it's time you started to think about establishing a production, assembly or distribution presence in the UK.

The benefits from a cost, quality, supply chain and environmental perspective are now compelling.

Source: Steve Collinge - MD Insight Retail Group Ltd.

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