On 23 June 2016, the UK popped the question that had rumbled under the surface of British politics for a generation: should the country remain within the European Union or end its 40-year membership and go it alone? 52% of voters opted for Brexit. Since that point, despite two and half years of negotiation, the situation seems to have reached a stalemate that is causing tremendous uncertainty in the UK.
While the future of the UK is still a big question mark for both its citizens and the rest of the world, here at Retail Maxim we wanted to try and understand the relationship between the current Brexit uncertainty and consumer spending in retail stores. To find out the answer, as always, we conducted a consumer poll. We posed the following question, “Is the current uncertainty over Brexit influencing your decisions when spending in retail stores?” We gave the 1279 respondents 3 options to choose from with the following results:
Yes – I am spending less – 18%
Yes – I am spending more – 2%
No – I am spending the same as usual 80%
So, it would appear that the spending patterns in retail stores of the vast majority of consumers is unchanged, despite the high levels of uncertainty. Having said that we can’t ignore the fact that 18% of respondents indicated that they are, in fact, currently spending less than normal. Given the myriad of other challenges that retailers are facing through increased overheads and the threat of online, this is now visibly biting.
At this point, the interesting question is, will consumer spending change when the situation is resolved? To try and answer this we asked a second question to the poll: “Are you planning on spending more when Brexit is resolved?” We gave the 1055 respondents a simple yes / no option to choose from with the following results:
Yes – 11%
No – 89%
So, although there are some signs that people may plan to spend more when this is all over (11%), the vast majority of consumers don’t plan to. Assuming there is a satisfactory outcome to the current deadlock, it would appear that the ‘Brexit Bounce’ may be a modest one.
At the end of the day nobody has crystal ball and while it remains to be seen how Brexit will impact the retail sector in the long term, it could in fact provide some opportunities for retailers. A weaker pound means UK retailers may be able to sell more goods abroad, as prices have become cheaper and more attractive. Foreign buyers and international customers wanting British goods might take advantage of a weaker pound, creating a spike in demand for products.
There is also the chance to promote locally-sourced and locally-produced goods over those which are imported. This is already becoming an important trend in food and general retailing, and Brexit could provide a good opportunity for retailers to capitalise on it.
Finally, while store closures seem to be becoming a common theme, it may be that we are seeing a change in the high street, rather than its end. There are likely to be fewer shops, but this could be because the role of the store is changing. The unsettling impact of Brexit may encourage retailers to examine their business models and reinvent, as there is a growing consumer demand for retailers who offer events and experiences in their stores, rather than simply a place to buy. In turn, measuring those experiences will become increasingly important so that retailers can monitor, develop and improve.
At Retail Maxim we understand that customer experience is of increasing importance and, as such, we offer a range of services from Mystery Shopping through to ‘real customer’ Exit Surveys to assist our clients. Contact us today to find out how we can work in partnership with your retail business.