BREXIT - How Leaving the EU has Affected Business
Posted on 27th May 2021 at 13:13
It’s common knowledge that running a retail business with a physical shop location presents its own challenges in the modern world. Most of the challenges we face are the sort of things you’d expect like: online competition, a decline in footfall, changes in consumer spending or the British weather.
But what do you do when you know something like Brexit is coming but you can’t truly gauge the impact until we’ve left the EU?
This is where we were 6 months ago. Steering through the pandemic with this also on our minds.
I’d like to be open and honest about this, to explain in detail about the effect leaving the European Union has had on our business. So hopefully people can understand a bit more about the reasons we may or may not be able to offer something we were able to offer before.
How Brexit has affected Heaphys
Here’s what's happened with regards to our supply of clothing from EU based brands post Brexit.
On 29th January 2021, 1 month after the start of our third shop closure due to the pandemic - we finally left the EU and became a “Free to Trade” independent nation. Prior to this our brands and their representatives in Germany and Holland were quiet, giving no indication of potential disruption to the way we receive our clothing from the EU. In fact, everyone was quite relieved our government had managed to reach a trade deal with Union leaders making trade between both parties tariff free.
Good news then. “There’s no problem” you might say.
Well. Not quite.
We soon learned through our brands, buying groups and ultimately HMRC that something called Rules of Origin applies to all goods moving between UK and EU customs. Rules of Origin means that 95% of the product being shipped (in our case clothing) has to be made within the EU otherwise a 12% tariff is charged before the clothing gets to the UK.
Not one of our brands has been able to guarantee 95% of their product is made in the EU.
This means that any delivery we received from Germany or Holland this year has cost 12% extra. A premium that we have had to pass on to our customers in some way. You will find this to be the case in many businesses that buy from the EU.
In addition to the tariff charges, we’re finding it much harder to receive deliveries as quickly as we did and we can no longer place small orders with our makers in Europe. To make it worthwhile they are asking for a minimum order. Not quite what we expected from a Brexit trade deal.
So what are we doing about it?
What's next in Heaphys Brexit journey?
We’ve received all of our Spring/ Summer ‘21 deliveries and tried to keep any price rises to a minimum. We are hoping our suppliers will work out a way to make sure we can receive orders in good time. And for Autumn/ Winter this year we’re more focussed on U.K. based brands to provide a great product that is tariff-free and much easier to reorder from. At Heaphys we’ve always been happy to try and order a size in for someone if we haven’t got it and we’d like to be able to continue with this where we can.
In the coming months, we are hopeful the things we’ve mentioned are made as easy as possible for all concerned but in the meantime, we remain committed to sourcing great products for fair prices. There could be a great opportunity for British makers to take centre stage in our store.
Time will tell.
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