One year until Brexit: commerical insurer NFU Mutual presents retail view

Frank Woods, retail specialist at commercial insurer NFU Mutual, said: “Some retailers are already fighting to survive against business rates, changing buying habits, affordable wage levels – the list goes on and the market environment is at its toughest ever, particularly for those slower to adapt.

“Businesses are frustrated at the current impossibility of planning for a Brexit unknown, and impacts on regulations, consumer and employment law, staff and wage levels, exchange rates, import fees and so on will require proper attention. I hope that with just one year to go, we now see answers that give retailers ample time and proper head space for plans to get underway.

“The prospect of deregulation once Britain leaves the EU is already a concern for consumers – our own research found that only one in ten people have confidence in a global food supply chain – and businesses should consider how any changes they make to perceived quality of food may be under the microscope. Upset concerning the prospect of widespread cheaper GM foods and chlorinated chicken from the US are examples of outcries that represent the naturally high standards of UK consumers, who have been reasonably sheltered from these practices for many years.

“Retailers should familiarise themselves with the potential effects and the vulnerabilities they may be exposed to as a result of Brexit, to safeguard against potential unexpected consequences such as increased import costs that may encourage alternative – and less secure – means of supply.

“That said, the way that the food industry approaches supply strategies is already changing. A Brexit-induced drop in the value of sterling has contributed to significant price rises in imported produce, forcing retailers to improve supply efficiencies, reduce margins or increase prices for consumers. In attempts to offset rising import costs, retailers are bidding to source more goods produced in Britain.

“Other research we conducted also found that 99% of consumers would buy more British or local food if retailers made it easier for them, with almost half (49%) considering products to be ‘most British’ when the ingredients are grown here. British food also has its advantages through a shorter and better regulated supply chain that may be more manageable and less likely to be susceptible to fraud. Of course it is not possible for everything to be grown here and there are challenges with how the entire food industry would be supported to cope with such demand, but it is, at least, promising that there is appetite for British-produced goods amongst consumers.

“Retailers may feel at the mercy of food producers to mitigate risk, but they too have a duty to ensure that the food they sell is legitimate and safe and to improve consumer confidence, especially given that they are not immune to the reputational consequences of not doing so.”