Is the UK’s ecommerce channel the first casualty of Brexit?

The outcome of the Brexit vote will certainly have consequences for the UK’s ecommerce channel. PCR takes a look at recent events since the decision to leave the EU.

When Britain voted to leave the EU, there were mixed reactions across the channel. The future of the UK’s IT and technology verticals for some is still uncertain, but there is little evidence that Brexit will actually cause the channel to collapse. There has however been several indications that Britain’s choice to break away from the European Union will cost consumers greatly. 

This month, Tesco announced it was embroiled in a dispute with Unilever over its price hike of some well-known brands.

This standoff has forced Tesco to remove certain products such as Marmite, Ben & Jerrys ice-cream from its website, as it scrambled to save what stocks it had for its brick and mortar stores. 

“Clearly the scale of the negotiation is much bigger than usual, but so is the event. Brexit-sized events are rare,” analyst Bruno Monteyne at Bernstein told the BBC.

“This is such a large event that it may simply be that the two gorillas on both sides have decided to go through the motions of the negotiation on behalf of the industry. This isn’t about Tesco or Unilever, but about all UK retailers and suppliers.”

However, Tesco and Unilever quickly settled the disagreement. A spokesperson from Tesco said: “We always put our customers first and we are pleased this has been resolved to our satisfaction.”

“This isn’t about Tesco or Unilever, but about all UK retailers and suppliers.” 
Bruno Monteyne, Bernsetin

Severine Philardeau, vice president of retail and brands solutions at RetailMeNot and operator of VoucherCodes explained her thoughts surrounding UK ecommerce, and the possible impact of Brexit: “There is still so much speculation around what Brexit means for retailers and consumers, but unfortunately we do not have a crystal ball to accurately predict what will happen. The main impact to date has been the decline of the pound vs the dollar and the euro, which brings both challenges and opportunities. With a weaker pound, it is much more expensive to import goods produced elsewhere; if tariffs also end up increasing as a result of Brexit, we could see the costs of imports increase further. 

“On the other hand, goods produced in the UK could be cheaper so there’s the potential to boost exports in some retail categories. If there is a recession in the UK following Brexit as predicted by some experts, consumers will be more than likely turn to online shopping even more than they do today, hunting for the best deals at their own convenience. 

“VoucherCodes, for instance, was born during the recession of 2008, at a time when consumers were looking to shop in a much smarter way. We’re a savings destination, and our position in ecommerce could solidify as consumer spending tightens up.

“The UK is a very strong digital market and leads the way in many dimensions. There is no reason this will change with Brexit – the UK ecommerce market will remain extremely innovative and dynamic.”

At the time Philardeau made these statements, the disagreements between Unilever and Tesco over product prices had not emerged. Philardeau’s comments, however, sum up the possibility of what would happen if the price of importing goods to the UK increases. This is a point that the Tesco and Unilever spat clearly demonstrates. 

While it hasn’t happened yet, the chance of a similar disagreement effecting UK ecommerce channels is a distinct possibility. If this does happen, more retailers could be forced to pull items from their website, just as Tesco did, in an effort to protect their retail stock supplies. 

This scenario could soon be more than just speculation, as companies will have to reconsider the avenues through which they get their products to shelves. This could present a tense situation for ecommerce.

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