Consumers – and retailers – are nervous. With prime minister Boris Johnson now pushing hard on October 31’s Brexit deadline the uncertainty that still surrounds exactly how Britain will leave the EU, and the impact that may have, means a hesitation to spend by consumers. How retailers react to such nervousness could spell the difference between longer-term survival and failure.
The impact was clear in August figures from GfK’s Consumer Confidence Index, which showed a decline to -14 compared to -7 for the same month in 2018. The index comprises a number of different measures, including attitudes to personal financial situations over the past 12 months and over the next 12, as well as opinions of the general economic situation over the same periods.
The falls were most dramatic as consumers looked forward, with a 5 point fall in their confidence in their personal financial situations and a 6 point fall in the general economic situation.
Brexit takes the blame
And retailers have already started blaming the nervousness for falling sales. In August, McColl’s chief executive Jonathan Miller cited poor weather and “ongoing macro-economic uncertainty” for a fall in Q3 sales. In July Sainsbury’s chief executive Mike Coupe was reported as saying the October deadline was “about as bad as it gets”.
Meanwhile in early August the British Retail Consortium cited a consumer spending increase of only 0.3% for July – the lowest figure ever recorded for the month. “Brexit uncertainty has left consumer spending languishing,” said the BRC’s chief executive Helen Dickinson.
And according to a survey published by Global-e, in association with Censuswide, it’s unlikely to get better any time soon. It suggested that almost half (49%) of retailers anticipate a collapse in consumer confidence in the UK post-Brexit. A similar amount (43%) said they will raise prices post-Brexit. Is it any surprise consumers are wary of the future?
Why communication is key
So what can retailers do? As ever communication is vital to ensure they remain as close to their customers as possible. They may not have all the answers in terms of what the future brings pre-or post-Brexit but customers are more likely to buy from retailers they trust.
It is those that invest in building strong relationships with their customers through great customer service and experiences, and who invest in technology to enable that, who are best placed to help steer their businesses and their customers through the uncertainty of Britain’s departure from the EU.
Originally published Sep 19, 2019, updated Jan 16, 2023