How Brexit will impact Retail

The headlines said it all, hundreds of articles pouring out on the doom and gloom of Brexit's impact. Hardest hit will likely be London, an epi-center of finance and FinTech in the European Union, until perhaps now.  

It's raining Shock, as the world reels to the Brexit decision. 

The historic vote has definite short-term consequences, as the UK is set to leave the EU. It's no longer hypothetical, the UK becomes the first state to ever leave the EU and there is no retail or financial precedent, no guide to help assess the wider macroeconomic implications, and though there were some dire warnings, the will of the people has and shall prevail. 

According to earlier warnings in the Spring, retail, restaurant, and food and drink companies are highest at risk from Britain's exit from the EU, according to credit ratings agency Moody's. But could short term pain translate into long term gain?

The world of finance has a very poor relationship with uncertainty, and this is uncertain with a capital U. Delayed investment decisions, companies moving to other locations, regulatory changes, and even additional trade barriers could all impact slower medium term growth. 

Lower wage European immigrants will be in shorter supply thus leading to higher costs for the food and drink retail industry and restaurants. It has not been unusual for companies such as Greencore, Britain's biggest sandwich maker, to recruit from other EU countries for staff. 

The reputation of a lot of red tape by UK Governments with regard to complicated legislation and regulation may complicate leaving the EU for the retail sector, while being subject to EU legislation without any formal role in deciding it could prove tricky in subsequent months. 

In an era where international trade is more important than ever, would the EU even penalize the UK for leaving in unexpected ways complicating imports and exports?

However, being less tied to the EU, may actually help the UK build more specialized trade with further partners. The inevitable move of some businesses and companies out of London will definitely hamper the retail sector there, for an unforeseen period into the future. 

So far the way financial markets have digested the news is worrisome and how far this influences retail globally remains unclear. The retail industry has to remember that doom and gloom for some, is a light at the end of the tunnel for others and find ways to capitalize on these political and financial trends. 

Some retailers identified as being especially vulnerable to Brexit are likely in the clothing market, where consumer confidence has already been below average in the UK. The immediate impact on Retail is surely higher labor costs, that will test markets. 

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How do you see Brexit affecting Retail in the UK and elsewhere?