01 July 2016
Siobhan Gehin, partner at management consultants, Kurt Salmon, sees currency exchange rates as the biggest short term headache, with longer term worries like sourcing, recruitment, and salary costs, waiting in the wings.
“Just when retailers thought trading conditions couldn’t possibly get any more difficult, they are now going to be challenged to compete harder for each £ of sales, and they’ll need to cut costs simultaneously".
“One of the biggest issues – and one which is already being felt – is the impact on Forex. Even prior to the referendum result, dollar-denominated imports to the UK were already costing retailers 5% more in June versus January this year. In the days following the election, this looks more like 10%, with considerable uncertainty surrounding future developments. If sterling continues to fall, we may well see the economic balance tip in favour of British manufacturing. This poses a practical issue as we simply do not have the fashion manufacturing capability in the UK. In the medium term, we may see some investment in rebuilding the capability of the almost defunct UK fashion supply base".