A report from Kantar Retail has suggested that some of Britain's retailers may look to re-evaluate their operations in other European markets following the Brexit vote.
"Retailers with headquarters inside Britain will primarily be concerned in the early stages about the financial market effects," said Kantar Retail’s UK and European Analyst Team.
"In the short-term, their ability to import goods from the European Union will be adversely effected by a weaker Pound:Euro exchange rate. Nearly all retailers will look inward to source locally and we at Kantar Retail feel that the retailers that have done the best job of cultivating good relations with British farms and fisheries will do better than their peers in the immediate term."
Amongst those most exposed are Tesco, of which 15% of its business is located within the EU, i.e. outside the UK, and Marks & Spencer, of which 4% of its business is in other EU countries.
"Tesco has strong interests in Central Europe (Poland, Czech Republic, Slovakia and Hungary) and Brexit will impact cash inflows and outflows, as well as the company’s ability to invest," said Kantar Retail.
"Sainsbury’s may reconsider its current Netto business in partnership with Dansk Supermarket. Morrisons is well-situated as its processing plants are based locally in the UK. However, it will be more exposed to commodity price fluctuations due to its membership in the European buying group AMS. Marks & Spencer sources most of its products locally, but its French supermarkets will be exposed to the Brexit changes."
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
