As Theresa May announces a date for triggering Article 50, it seems appropriate to think further about reaction to Brexit in our sector. I have no objective measurement to support this view, but subjectively I perceive a real desire among consumers to support UK produced goods (food and non-food) with both Marks & Spencer and the Co-op appearing to be making a serious effort to renew their supply chains to focus on this.
I’m old enough to remember the ‘I’m backing Britain’ campaign in 1968 that tried to generate a similar change, but maybe this time a more natural and grassroots movement may achieve more. Better independent retailers are already working hard to source, promote and sell local produce. Sourcing and ranging limitations in the sector already mean that the percentage of UK goods in independents is naturally higher than in the more internationally focused multiples. Own label penetration in even the very best independents is also much lower than the multiples. They also sell fewer local lines. But it seems to me that independents are as well placed as anyone to capitalise on the new mood and emphasise their localness in economic as well as community terms.
Recent comments by Lord Lupton on the need for business to pay tax or risk a customer revolt also add to the atmosphere suggesting we all pull together. While the emphasis of the comments was on the disgraceful actions of multinationals like Apple, Amazon and Starbucks, independents are in a very strong position to claim that they pay their way in society in a much more straightforward way than has become the norm recently.
The Chancellor again emphasised that Brexit has major consequences for UK plc and I doubt we have seen all these consequences played out yet - indeed it feels a little as if we are in a phoney war. Nonetheless it is pleasing that the direst predictions have not come to pass, and as always in business we must seize the opportunities presented by this brave new world.
Finally, in an interesting comment from Mark Littlewood of the Institute for Economic Affairs, comes the claim that the new EU tobacco regulations will cease to be legal once Article 50 is triggered. This means that with the PM’s decision on invoking it, the law due to come into effect in April 2017 appears to be in some doubt. Given that this law has a vastly disproportionate effect on independents, where sales of smaller pack sizes (mainly 10s) are an extremely important contributor to the category, this comment is intriguing. I suspect that the health mafia will ensure that a reprieve is not achieved but the possibility is there.
Steve Parfett is chairman of AG Parfett & Sons
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