Tech Trends

E-commerce Winners x Losers In The Wake of Brexit

Britain’s decision to leave the EU, following a 52 percent majority in Thursday’s referendum, continues to rock the markets. After a brief respite, today retailers like M&S and Travis Perkins saw their shares fall more than 10 percent. Meanwhile, the pound plummeted to a 31-year low.

Investors hate uncertainty. And the two-year “conscious uncoupling” from Europe will be an uncertain time for U.K. retail — an industry pinning its hopes on an e-commerce boom.

As the dust settles, we asked the experts for their take on the winners and losers of Brexit.

Winners
Overseas shoppers
In these first weeks, it’s likely that consumers outside Britain will cash in on the weak pound by stocking up on goods from U.K. e commerce sites, Paul Thomas, a senior consultant at Retail Remedy, told Digiday. Many, like fashion retailer Whistles, offer overseas customers the ability to pay in the currency of their choice, including pounds. Clothes are the biggest draw, while electronics less likely to sell, due to the difference in their power adaptors.

Mobile retail
M-commerce already accounts for 33 percent of e-commerce sales in the U.K. (over £20 billion in 2015). Now, Ray Gaul, VP of research and analytics at Kantar Retail, thinks mobile retail is likely to surge in the aftermath of Brexit. With belts tightening, there will be an increase in search traffic as consumers shop around to find the best price. And these extra eyeballs will be easy for mobile sites to convert into sales, he said.

Innovators
While adapting to changing regulations around tax and data protections will likely squeeze retailers’ margins, Martin Gill, Forrester’s principal e-business analyst, said those who “shut the door” to innovation will suffer. Investing in social and digital experiences will help retailers differentiate in a competitive climate. This can also apply to capitalising on negative consumer sentiment with money-saving offers rather over those that encourage users to spend more.

Losers
Overseas supply chains
For Thomas, retailers who have most to lose in the negotiations around Britain’s relationship with the EU are those with suppliers abroad. Now that Britain is outside the EU’s free trade agreements that allow goods and people to travel across borders tariff-free, new tariffs may be introduced on imports. This would make it more expensive to make and ship parts to the U.K. Also, paying suppliers in dollars or euros, if the currencies stay strong against the pound, poses a big threat to margins.

Big ticket items
Gaul said in the short-term travel and financial products are likely to thrive as holiday-goers a chance to lock in their prices now with products like insurance. However, those likely to suffer will be “durable” goods like electronics and furniture products, as people put off their decision making for big ticket items until the economic outlook is more certain.

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E-commerce Winners x Losers In The Wake of Brexit
1 Comment

1 Comment

  1. Stewart Levin

    July 7, 2016 at 4:39 pm

    Brexit also means that for Non-European startups who used to view the UK as a first stop to kick off their European campaigns now have to make a change and perhaps create entrance strategies for the UK and the other larger European economies of Spain, France and Germany. Winners are these 3 countries and UK could possibly lose business.

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