How UK Retailers can successfully navigate Brexit

Many leading UK Retailers are already feeling the effects of Brexit. Growing inflation and a volatile currency are putting significant pressure on retailers in the UK. Service and supply chain costs are expected to become major financial challenges. Grocery will be significantly affected with declining profit margins and consumer spending. Fashion retail will need to look at sourcing and labor costs to maintain competitive advantage.

Brexti, UK retail

But Brexit is not all gloom and doom. UK-based online retailers will be able to sell a lot more goods abroad priced in sterling pounds, as the fluctuating currency has lowered UK prices for overseas shoppers. Retailers would be wise to raise international prices to maximize sales margin.

Retailers will also need to overhaul their sourcing and supply chain processes. Leaving the EU could allow UK-based retailers to buy in the cheapest markets. The tariffs that the UK imposes on imports may be lower than the EU ones or even zero — especially in food imports. Every UK Retailer will need to move quickly to create new supply chains going forward to take advantage.

The one thing we can say with certainty is that post-Brexit retailing will be working with softer margins, so automation will be key in maintaining competitive advantage. As the labor market declines amidst the effects of inflation, retailers will need to look toward higher rates of automation to stay competitive.
By employing machine learning, retailers can manage the uncertainty they’re facing and enjoy the benefits of scalable precision can deliver in the post-Brexit retail landscape. The industry-leading accuracy of Blue Yonder demand predictions are at the core of our retail machine learning solutions. They’ve been proven in delivering precision at scale for merchandising and supply chain decisions in ultra-competitive retail markets.

Blue Yonder Replenishment Optimization solution can reduce out-of-stock rates by up to 80 %,even in the ultra-competitive grocery market. The solution incorporates KPIs and external demand factors, delivering a demand decision for every single SKU and store replenishment query. Demand is calculated with consideration to local assortments, pricing, promotions and the weather, to ensure our fully automated replenishment decisions in-step with customer demand, daily.

Blue Yonder Price Optimization similarly alleviates the potential impact of high landed costs. A pricing strategy optimized with machine learning can maximize the vulnerable margins caused by a weak pound and still maintain brand promise.

It will take some time for the path of the post-Brexit UK retailing to reveal itself fully. But we can predict with some certainty retailers who start their machine learning journey today will have both the confidence and technology they need to compete.

Matt Hopkins Matt Hopkins

is a Retail Industry Principal at Blue Yonder. Matt has spent over 20 years in the Retail Industry, working in Supply Chain & Merchandising roles before joining JDA, Oracle Retail, Salesforce and SAP in senior leadership roles.