UK retail sales to EU plummet by £6bn following Brexit

brexit 2Brexiteers’ claims of a new frictionless trade deal with Europe have been exposed by new figures which show British brands and retailers have seen international sales to the EU plummet £5.9bn since the UK left the EU.

The decline, which ParcelHero predicted way back in 2021, is even more of a blow as the European ecommerce market is booming.

And, while these claims may have looked good on paper, much like many of the promises, the reality is far different, especially for retailers who have even more red tape to deal with. So says, Tradebyte research, conducted in partnership with Retail Economics, which draws upon official UK trade statistics compiled in Q1 2024.

Online retail is estimated to add £323bn 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.

The UK’s non-food export environment, particularly in the clothing and footwear sector, has faced significant challenges post-Brexit. Exports in this category have dramatically declined, falling from £7.4bn in 2019 to just £2.7bn in 2023.

This has put huge pressure on brands and retailers lacking the necessary expertise, resources, or financial capacity to navigate the complexities of the new regulatory landscape.

These challenges include escalated logistics costs, the complications of registering an EU entity for trading, and increased delays in an already fiercely competitive market characterised by tight profit margins and the need for rapid response to the latest trends.

Pre-Brexit, apparel was a top three exporter for non-food retail, but now health and beauty, electricals, and DIY and gardening make up three quarters of UK retail exports to the EU. Health and beauty, and DIY and gardening are the only two categories to have seen a marginal increase in export values since 2019.

Amidst export challenges, online opportunities across Europe have accelerated since the pandemic, with marketplaces emerging as pivotal platforms for UK brands and retailers to mitigate the impact of Brexit.

Online marketplaces, which now account for over two-fifths of the EU’s £322.6bn annual online non-food sales, offer a streamlined path to access affluent and younger consumer demographics.

The concentration of sales among the largest EU markets means the top ten online markets account for the lion’s share of non-food online sales, with marketplace sales alone accounting for at least £133bn of EU ecommerce.

Retail Economics chief executive 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.

“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.”

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