Post-Brexit UK sales to EU plunge, fashion is worst hit

The bad news is that British retail sales to the EU have plummeted by almost £6 billion since Brexit. The worse news is that fashion has been particularly hard hit with a drop of more than 60%.

That’s according to a new study from economics research consultancy Retail Economics and DTC e-commerce platform Tradebyte. Despite a lot of headlines around the issues with exports and imports of food, it shows that non-food EU exports have borne the brunt of disruption in the past few years.

It also shows the “complexities of the post-Brexit landscape for UK-based brands and retailers and opportunities of online marketplaces for exports”.

The report’s headline news is that British brands and retailers have seen international sales to the EU falling £5.9 billion since Brexit, “despite a flourishing European e-commerce market”. 

It added that “online retail is estimated to add £323 billion of annual sales to EU economies, but additional trade frictions caused by Brexit-related complexities are curtailing this international sales opportunity for UK-based brands and retailers. The value of non-food retail exports has fallen by almost 18% since 2019, despite hefty inflation softening the decline”.

So what about that precipitous drop mentioned earlier for the Clothing & Footwear category? The “significant challenges” post-Brexit have meant exports in this category have tanked, dropping from a healthy £7.4 billion in 2019 to just £2.7 billion in 2023. 

And the study pointed out that this sharp drop “has put considerable pressure on brands and retailers lacking the necessary expertise, resources, or financial capacity to navigate the complexities of the new regulatory landscape”.

This makes the large number of business failures by independent labels and smaller fashion firms over the past few years much easier to understand.

So exactly what form has that pressure taken? Rising logistics costs, the complications of registering an EU entity for trading, and increased delays have all taken their toll. Particularly given that companies are operating in a market that’s already hugely competitive, where profit margins are tight and where the need to react quickly to trends is key.

The extent of the issue can be seen from the fact that Apparel was previously a top three export category in non-food retail. But today, three-quarters of UK exports to the EU are made up of Health & Beauty, Electricals, and DIY & Gardening make up three quarters of UK retail exports to the EU. In fact as bright spit for style-related industries is that Health & Beauty is one of only two categories to have seen a marginal increase in export values since 2019.

That said, the study reports online opportunities across Europe having accelerated since the pandemic, “with marketplaces emerging as pivotal platforms for UK brands and retailers to mitigate the impact of Brexit”.

Such marketplaces, which now account for over 20% of the EU’s £322.6 billion annual online non-food sales, “offer a streamlined path to access affluent and younger consumer demographics”. 

Marketplace sales alone account for at least £133 billion of EU e-commerce.

“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,” said Retail Economics CEO Richard Lim.

“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.”