Brexit has created a lot of change for the EU and Britain’s politics in general. Although un-expectantly, Brexit has been affecting the British Fashion Industry more than anything else in the country. Brexit has officially caused most British retailers to post horrific declining quarterly numbers this year. One of U.K.’s biggest retailers, Marks and Spencer, commented that last week that like for like sales in clothing and home products fell “8.9% year-over-year in the quarter through July 2nd”. The newest chief executive, Steve Rowe, has been limiting the amount of sales/promotions the company gives to customers and even delayed their yearly summer sale. Although even without these usual sales, like-for-like sales would have probably fell 4%. Marks and Spencer Company still blames their lack of sales on a weak market.
Most British retailers have been having sale’s loss, except for the ASOS online store for young teens and 20 something’s. ASOS has reported an overall 26% constant currency increase in sales in the last four months since June. There has also been a general 28% growth in the U.K., which counts for two-fifths of the total growth in the U.K. market. Investors that are interested in U.K. industries have seen a 4% higher bid on stocks last Tuesday. So what has made a company like ASOS defy the sales declining odds? ASOS is an online-only retailer that ships merchandise almost all over the world. Barclays, a credit card division, has estimated a customer spending growth of 3.6% per year. Barclays states that the U.K. has had a growth mainly on online venues, showing a 15% increase in e-commerce transactions, while in-store sales have been flat.
British retailers are likely to see two major changes in the fashion industry. Cotton is one of the main ingredients in clothes, but since cotton is priced in dollars and the pound in the U.K. is depreciating, Cotton price will greatly increase. Another thing that will change is that companies, who would normally choose to raise prices to lower demand, will keep prices low to meet their daily sales goal. Some other retail stores think that Brexit will be the main cause for a major decline in U.K customer spending. Economists think that because of the deflation of the U.K pound, all imports would be more expensive.
Although most British retailers will blame their sale woes on the Brexit policy, retailers in North America have also seen a lower number in sales than usual. United State’s stores have had trouble competing with an influx of international online stores, Amazon fashion offers, and sportswear fad that has been booming. Brexit might not be the cause for retail problems, but it seems to be a global phenomenon, possibly resulting in the unsure direction in worldly politics.