Our Retail team just returned from a week in London where we met with the firm’s UK-based retail clients and other retail industry professionals. The biggest topic of conversation centered around Brexit.
On June 23rd, Britain will hold an historic referendum on whether the country will leave the European Union, which is often referred to as Brexit. There is a long history behind the relationship between Britain and the European Union and this is not the first time that a break has been considered. Most of the retail professionals we spoke with are against Britain leaving the EU because of the anticipated negative impact it would have on the UK’s economy, at least during the three or four years following the exit. Those in favor of Britain leaving the EU are nonetheless concerned about the ability of citizens of other EU countries to freely emigrate to the UK which, as the argument goes, takes jobs away from UK citizens and exacerbates security concerns. The bottom line is that there is uncertainty on both sides of the issue, resulting in a pause in commercial transactions pending the outcome of this vote.
Is there any good news? Amazingly, despite these concerns, it certainly seems that the everyday business of retail in London is moving along fairly well. Although there are always exceptions, such as the recent collapses of retailers BHS and Austin Reed, we happily found the streets and stores bustling and the mood to be positive overall. The iconic Hamleys toy store on Regent Street was bursting at the seams with young and old alike, and the beautifully merchandised The White Company store in Covent Garden was filled with many shoppers. And, there is no doubt that London retains its preeminent role as the mecca for international retailers.
We would be remiss if we didn’t make note of the many questions we were asked repeatedly about the upcoming U.S. presidential election. Many of the clients we spoke with have a very favorable view of President Obama, but they were perplexed, if not nervous, by our current presidential campaign and its possible outcomes.
Only time will truly tell what the effects of the Brexit vote will be, but in the interim, we will continue to monitor the situation and guide retailers through whatever impacts may be headed their way.