‘Auld Lang Syne’: Brexit disconnects a fashion market worth 50 billion dollars

Rarely has there been so much consensus in the European Parliament in regard to voting. With 621 votes in favor, 49 against and 13 abstentions, on Thursday, European deputies approved the agreement for the United Kingdom’s departure from the European Union, the first in its nearly thirty years of history. It is crackling for Fashion, at least in part, with a market of 50 billion dollars, the second largest in the continent, with the historic gateway of American fashion in the region and with one of the favorite destinations for retail.

On Thursday, after the vote, the Euro parliamentarians sang in unison Auld Lang Syne (for the old days), a traditional Scottish farewell song composed by the poet Robert Burns in 1788, although the most repeated message was that it is not a goodbye, but rather a ‘See you later’.

The divorce will be effective this midnight, Paris time, although there will be a transition period until the end of this year. Throughout this period, the two parties will discuss another key point of the division, business relations.

The United Kingdom has already begun to negotiate free trade agreements with third countries such as the United States

In the meantime, the United Kingdom has already begun to look for new partners, since after its exit from the Union it will regain its freedom to negotiate commercial agreements with third parties. The United States had already picked up the gauntlet last year, anticipating an agreement for 2020. 

For fashion, the separation could affect companies across the continent that operate in the country, one of the largest for the sector. The United Kingdom is the fifth foreign market in Spanish fashion for example, with exports of 1.4 billion euros (1.5 billion dollars) in 2018, according to the latest data from Icex Spain Export and Investment.

In the last five years, exports have maintained a positive rise, although they have slowed as the deadline neared, adjusting from increases of 9% in 2014 to 7% in 2015 and only 5% in 2018. Between January and November 2019, Spain exported fashion to the United Kingdom for 1,3 billion euros (1.4 billion dollars), just 0.3% more than in the same period last year.

The country is one of the biggest markets for fashion in Europe

It is also the gateway for American companies in Europe, that choose London for their first openings in the continent because of its cultural proximity to its local market.

On the other hand, Brexit is a new setback for already weakened local brands. Groups like Arcadia (owner of Topshop) and Mothercare and department stores like Marks&Spencer are engaged in an important restructuring of their history.

In 2018, almost 120 retailers took advantage of some formula similar to the creditors´ contest, 6% more than in 2017, according to Deloitte data. These processes came with a wave of closures that presented the United Kingdom as the first phase of the Apocalypse Retail in Europe.

In 2018, 2,481 net store closures were registered in the country, a historical record, compared to 1,772  that lowered shuttered the previous year. In total, they opened 3,372 stores, about nine a day, in comparison to the 16 stores that opened every day in 2013. Another 5,833 stores shuttered.  

Some companies, such as Primark, have already taken preventive measures. The Irish company moved its offices in Reading (United Kingdom) last year, where purchases, merchandising, design and quality control were managed at its headquarters in Dublin (Ireland).

But not only the British depend on the United Kingdom. Companies like VF, Nike, Amazon, Chanel or Cos (owned by the H&M group) have their headquarters in London for the European market. At the moment, none has announced its intention to leave the country.