British retail sales to the EU have plummeted £6bn since Brexit, despite a flourishing European ecommerce market, new research has found.
While online retail is estimated to add £323bn of annual sales to EU economies, trade frictions from Brexit-related complexities are limiting this sales opportunity for UK brands and retailers, according to findings by Retail Economics and Tradebyte.
The value of non-food retail exports had fallen nearly 18% to £2.7bn since 2019, with the clothing and footwear sectors hit particularly hard, despite steep inflation softening the decline.
Brands and retailers have faced challenges, including escalated logistics costs, complications registering an EU entity for trading, and increased delays in an already competitive market.
Retail Economics CEO Richard Lim said: “The profound shift in the UK’s trade relationship with the EU has hit British brands and retailers hard.
“Successive waves of disruption caused by Brexit and the pandemic have significantly disadvantaged UK exporters who are having to navigate through increased friction and cost.”.
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The new trading relationship with the EU has led to a shift in operations. While apparel was previously a top three exporter for non-food retail, now health & beauty, electricals and DIY and gardening make up three quarters of UK retail exports to the EU.
Health & beauty, and DIY & gardening remain the only two categories to have witnessed a marginal rise in export values since 2019
Marketplaces have emerged as important platforms for UK brands and retailers to soften the impact of Brexit.
Retail Economics and Tradebyte noted online marketplaces now make up over two-fifths of the EU’s £322.6bn annual online non-food sales.
Lim said: “Marketplaces have emerged as a lifeline to tap into the EU market, which now account for over half of online sales among the most affluent young and middle-aged EU consumers.
“As UK retailers search for expansion into new territories, marketplaces have emerged as an important channel for growth, opening up new scalable market opportunities at low risk.
“International retail is a complicated space to be in, particularly for UK brands and retailers looking to sell in Europe post-Brexit. From language barriers to taxation and customs issues through to warehousing and fulfilment, these are not small obstacles to overcome.”
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