‘Made in Britain’ labels and British retailers are often seen as a stamp of quality overseas. From the trendiest fashion brands, to chocolates, quality vehicles and more, international consumers are more likely to purchase products made in Britain. Could Brexit affect their brand or success overseas?
In the UK, ‘Made in Britain’ has long been seen as a selling point. It proves products are locally made and suggests that by purchasing, buyers will be helping to support their local economy.
However, recent research conducted by postal delivery company Whistl
, suggests overseas consumers are also keen on British-made goods. According to the company’s research, international shoppers are 68 percent more likely to make a purchase if a product was made in the UK. What’s more, the report’s findings show that 95 percent of foreign shoppers believe that a ‘Made in Britain’ marque on goods positively influences their decision to buy.
Why is ‘Made in Britain’ better?
A recent presentation from the Department for International Trade
at the Halo Financial and ACCA
seminar, Beating the barriers to international trade
, set out why UK exports are popular:
- Good design – quality of design in the UK is highly regarded
- Provenance –and an interesting story to tell
- Well-known, well-respected quintessentially “British” brands
The sectors where there are particular opportunities for UK exporters are:
- Education and Training - high quality operators and technology
- Healthcare – increasing populations and treatment trends; medical tourism
- Energy – a focus on new and niche technologies and productivity; solar energy
- Defence and security – wider regional concerns, e.g. Middle East, a catalyst for large spends
- Consumer – fondness for international brands, design and provenance
A wide range of brands are considered ‘particularly’ British. The three most instantly recognisable brands were found to be Burberry, Cadburys and Rolls Royce.
In analysing the most searched for British brands across selected international markets, one sector dominates the results: Fashion.
Fashion is by far and away the top commodity for overseas shoppers. As Seen on Screen (ASOS) was the most searched for British brand in five of the six countries examined. Only in China was ASOS not the most searched for British brand. There Burberry and Next proved more popular.
Only seven brands made up the top five searches in the six countries studied (Australia, China, France, Germany, Spain and the United States). Aside from the three already mentioned, Topshop, M&S and New Look were also consistently popular, while PrettyLittleThing crept into the USA and Australian top searches.
Unsurprisingly, British goods are particularly popular with British expats
. One in three admit to regularly having loved ones ship them goods that may not be available in their adopted ‘home’ country.
What’s more, Whistl’s research found that two-thirds of Brits abroad are happy to spend extra on having homegrown products shipped to them. Expats were willing to pay, on average, up to 10 percent more for some home comforts.
The desire for British-made goods seems to be particularly strong among younger expats. Under 35s are actually prepared to spend double the amount compared to retirees to get their home comforts shipped over.
An uncertain future
Whistl’s findings come at a time when British retailers need all the help they can get. As the date for Brexit
draws ever closer, many British retailers are growing increasingly frustrated regarding the lack of clarity on their future.
The EU has remained steadfast in its view that it is not willing to enter a new open borders trading relationship with the UK. Instead, it has offered a trade agreement similar to one that it recently agreed with Canada. This solution would likely represent higher costs for companies both in Europe and the UK when trading with one another – and ultimately higher costs for consumers.
Research carried out by Retail Economics and law firm Squire Patton Boggs
suggests that a combined total of £7.8 billion could be added to the cost of retail goods if the UK fails to agree a Brexit deal with the European Union.
The food and drinks sector is likely to be the worst hit by rising costs, closely followed by the fashion industry. The study found that the standard rate of tariffs is far higher for food and drink than the rate for non-food goods. Duties for some meat and dairy products are over 80 percent.
By way of comparison, the clothing and shoes sector of the industry has the second highest tariff rate at 10.8 percent.
This comes after the UK’s second-largest supermarket chain, Sainsbury's, warned it will need at least a year's notice to prepare trading arrangements with other EU countries once the UK leaves the EU.
The declining value of the Pound has already prompted many British retailers to ramp-up their prices.
Sterling has fallen by around five percent against the US Dollar since the EU Referendum was held. This depreciation has increased pressures on retailers to raise prices as the costs of raw materials have risen.
Goods have risen at the fastest rate for five years, according to the Consumer Price Index. However, wage increases are only just managing to surpass inflation, at 2.5% compared to 2.4% growth in inflation; in fact, there has been a slowing of wage growth, putting pressure in UK consumers, alongside rising energy costs from soaring crude oil prices.
British retailers are becoming increasingly aware that raising prices may not be the answer to their problems. After all, there’s no point in making goods expensive if the average consumers simply don’t have enough money to buy.
This could lead to retailers trying to expand more into overseas market. Daniel Rubin, founder and executive chairman of London-based shoe retailer, Dune, told CNBC that his company is looking to prioritise other investment areas, rather than increase prices. He revealed that his company's strategy is investing in e-commerce and looking at expanding into international markets. "The most exciting growing area is international," Rubin stated. The Middle East, India and Southeast Asia were three markets he believes offer plenty of potential.
Many other companies are almost certainly thinking along the same lines.
Opportunities in the current pre-Brexit marketplace
Overseas buyers, including British expats, could actually be ideally placed to take advantage of the current marketplace. For many overseas-based consumers looking to buy UK-based goods, currency exchange rates are likely to be favourable. This means they may not be as adversely affected by price rises as those based in the UK.
While British retailers are undoubtedly facing a tough couple of years, it’s not all necessarily bad news. The fact that ‘Made in Britain’ continues to be a badge that influences consumers from the wider world to make a purchase is sure to be encouraging for many businesses, especially those looking to expand overseas.
With some market research into target countries, including pricing, the impact of currency conversion, shipping and returns, opportunities exist for British brands to take their businesses in a new direction.
If you’re a British business looking to expand overseas, contact Halo Financial today to see how we can help you take advantage of the current market with any currency-based aspects of your business.
DiT can provide advice and guidance for British brands considering trading overseas. Your Halo Currency Consultant would be happy to make an introduction, or visit www.great.gov.uk