Retail and wholesale

The UK retail market is fiercely competitive, and is sensitive both to price changes and the mood of the public. While some UK retailers have footprints abroad, most of the industry operates domestically, so the depreciation in currency does not work in its favour. Nevertheless, retailers have worked hard to mitigate the effect of currency change and have managed to ensure that by and large cost increases have not been passed on to customers so far.
Retail does not operate in a vacuum and its success has a positive effect on other industries. Retail companies are at the public-facing end of sophisticated and varied supply chains – including but not limited to agriculture, food and drink, consumer manufacturing, pharmaceuticals, cosmetics and the creative industries. As the retail sector is predominately goods based, transport, distribution and warehousing are also important. The rapid uptake of new payment systems by UK retailers, driven by a focus on meeting changing consumer demand, has helped support the growth of financial services and fintech in the UK.

Key stats

  • 5.0 million employees
  • £182.0 billion GVA (10.9% of total GVA)
EU Trade: Maintaining a tariff-free and barrier-free relationship with the EU should help UK retail businesses keep costs low for consumers

The overriding objective of UK retail is to keep prices low for consumers. Leaving the EU may present some challenges to realising that objective if tariffs and customs red tape are applied to the UK's trade with the EU. Therefore, UK retail's top priority for the forthcoming Brexit negotiations is to secure an agreement that will allow two-way duty-free trade to continue.

Migration: Access to international labour helps support growth in the retail sector

Domestic retail supply chains, especially food supply chains, rely upon access to non-UK labour and restrictions to accessing this labour may undermine the ability of these supply chains to meet retailers' requirements and consequently consumer demand. In addition, retail itself employs 120,000-200,000 EU nationals. Retailers believe that it is right that these valued colleagues are given the earliest possible assurance that they will continue to have the right to stay and work in the UK.

Regulation: The retail sector is seeking regulatory stability and certainty, and to maintain quality for consumers

UK retail is affected by EU regulation, ranging from consumer information, through environmental protection, product safety, competition law and health and safety in the workplace. Transferring responsibility for these areas from the EU to the UK promises to be a complex and resource intensive process. As far as possible, the government should indicate how it will handle this process and restrict itself to making only those changes to regulation that are strictly necessary in order to make any regulation "work" in the UK. In particular, the government should resist the temptation to make substantive changes to regulation until the process of transferring responsibility has been completed.

International: New international trade deals could broaden choice and lower costs for retailers

Leaving the EU may have implications for the UK's trading relations with other countries. Whilst in the longer term there maybe opportunities to open up new trading relations, the immediate priority will be to ensure that the benefits of the EU's existing preferential trading agreements are still available to UK firms post-Brexit.

Exit: A smooth exit is necessary to ensure the continued supply of retail goods for consumers

It will be an enormous challenge for the UK to negotiate a duty-free deal with the EU, and put in place effective customs procedures within the 2 year time frame envisaged by Article 50. The immediate imposition of tariffs and paperwork, particularly on perishable products, would create complexity and cost at borders. Every effort must be made to avoid that. Therefore, the government should give serious consideration to the need for transitional measures that will help smooth the path of Brexit and ensure that UK firms and consumers are not adversely affected.

Our members say

"Customers could benefit from lower prices if the UK were to sign free trade agreements with countries across the world. However, the cost to the customer if the UK is not able to access tariff-free goods from the EU would be several times greater." - large British supermarket

"Our business buys, sells and physically moves thousands of different items between the UK and the rest of the EU on a daily basis. In the best case, Brexit means we sell our goods at a higher price. In the worst case, tariffs and/or administration burdens have the potential to destroy our century old business." - women's fashion clothing retailer

Lots of the goods we sell come from the Republic of Ireland because consumers wants fresh, local produce. Any delays would affect our very fine margins and potentially our perishable products." - medium-sized retail chain
Our partners have more information:
  • British Retail Consortium

For retail at the CBI, contact: Polly Haydn-Jones on 0207 395 8182 or Polly.HaydnJones@cbi.org.uk

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