THE BREXIT BOMBSHELL HAS HIT RETAIL

This week [retail bytes] explores: How did the retail industry react to the Brexit?

 When in doubt, blame it on the servers: On the historic day the UK left the EU, Friday June 24th, Asos.com fashion obsessives found a blank screen meeting them instead of the usual lovely styled fashion edit. As the pound was going to hell in a handbasket, Asos took down their website and app for most of the day. Nobody expected the Remain camp to lose and e-com retailers simply did not have a plan B in place. Asos informed the public that it might have been a “server issue”, but for the company that has built their own e-com platform and has the fastest load page time amongst the young fashion sites, we think an engineering outage is highly unlikely.

Net-a-porter decided to leave the pound option on but disabled buying in GBP currency. Many other retailers took pounds away from their currency options for Friday, after the pound dropped to its lowest level in 31 years. It was a bad day in the office all around, including at pro-Brexit Wetherspoons, whose shares dropped by nearly 10%. Auto-goal.

Brexit survival tactics: The end of the free movement of labour (which however may take years to implement) in the EU means having to obtain work permits for your international staff, which can only be applied for exceptional personnel. It is a lengthy process, takes time and is a massive commitment from the company – currently it’s done for top non-EU talent, but the blueprint exists. To get the top talent, retailers will have to put money aside for good lawyers with an inside track to the Home Office or (more likely) move part of their operations to labour-friendly places like Amsterdam, Utrecht or Rotterdam in Holland, where there is a good number of experienced multilingual retail staff, as well as great We Work co-working spaces and urban cycling to die for.

Made in UK: No longer OK: Tariffs on British-made goods and services will be introduced post-Brexit, while similar duties on EU-made products will need to be planned into the models. To minimise problems, review your supply chain now, particularly if your market is in the EU – your business may be better off moving production from the UK to the EU to minimise currency risks.

Buckle up for the IP bumpy ride: The UK fashion industry will need to solve Intellectual Property issues, as we will no longer be part of the EU Trademark Agreement, which is only available to EU member states. This could create a substantial risk to brands’ IP. As such, when they need to register again, there may be timing issues, whereby someone can challenge them for primacy and take over their trademark. Audit your IP assets now, or prepare for a bumpy ride.

What is everyone else planning? According to the Institute of Directors UK, one in four London-based businesses plan a recruitment freeze in the wake of the referendum, and two thirds believe that Brexit will have a negative effect on business, according to a poll of more than 1000 members. Only a third of polled directors said they will continue to hire, optimists that they are. In addition, 5% will make redundancies and nearly 20% will start looking to move the business abroad, as per findings by Simon Walker, the Director General of the Institute of Directors. Before the result was even released, HSBC announced plans to move up to 1,000 staff from London to Paris in case of a Brexit. What’s next?

The Retail Practice is now working with a team of international employment lawyers with backgrounds in the cross-border management of trademarks, including new applications and infringement monitoring. So, if you have questions regarding your recruitment staff needs in the EU, get in touch with us at hello@theretailpractice.com as we have a branch in Holland and can advise on the transition.