Wayne Dance is managing director of KBB distributor InHouse whose portfolio includes German brands Schüller, Pelipal and Nolte Delbrück and Italian brand Aster. Here he explains why retailers should see the Brexit vote as a positive rather than a negative…
As a retailer of German products, I am sure that you will have many questions on the implications of our Brexit vote and the decision taken to leave the European Union, so I want to pre-empt current concerns and reassure you with my own view.
Let’s face it, the only thing that is certain right now is that no one seems to know the timescales for our exit from the EU, or, it seems, if the decision to leave is final. However, every situation presents an opportunity to turn a negative into a positive. Take a second to look at the words below and consider what you see.
In this climate of uncertainty some of you may see ‘opportunity is nowhere’; while others will see ‘opportunity is now here’. As our business partners, you know which camp InHouse is in. We have always worked as a team and we will continue to do so. Let’s not get weighed down with negative views, let’s all work together to do what we do best with Nolte Delbrück, create opportunity and success. Let us focus on the positive.
For instance, Switzerland is not part of the European Union but it is the second richest nation in the world, has its own tailored EU deal, adopts some EU rules and successfully trades with the EU. If we are indeed to come out of the European Union, we have this successful blueprint to follow. Let’s just hope we have tough negotiators. I certainly wish I could be around that table!
For now, we continue to see record orders from our retailers and there’s no sign of this slowing down. However, for many of you, this is your busiest time of year so it will be difficult to judge long-term impact on the decision to leave the EU.
Let’s not forget who we are. As Nolte Delbrück retailers we have had experience of an economic downturn and we came out as champions. In the 2008/2009 recession when other companies cut back, Nolte Delbrück invested. When other companies reduced operations, Nolte Delbrück kept the factories open and producing. There will undoubtedly be nervousness in the industry and some will put the brakes on as a result, but we are not a company to back down in the face of challenges. We always see that the opportunity is now here.
While the markets have reacted strongly to the news, the full financial impact of this decision has not yet been felt. What we do know is that any impact will affect the whole of the industry, not just European companies importing to the UK. That’s because every bedroom has raw materials and components bought from Europe and paid for in Euros. Whether the exchange rate goes up or down, everyone will be affected. The only difference is that we pay for our bedrooms in Euros, so we see the immediate impact.
British manufacturers who buy two or three months in advance will have had the temporary advantage of buying at previous higher rates, but of course, new stock orders will be affected by the devaluation. This will have an impact on their selling price.
Conversely, when the Pound rallies, we have instant access to the improved rate. Those of you have positive cash flows can benefit from our relationship with World First buying currency when it’s at its best rate to protect yourself from erratic fluctuations. Stock manufacturers will have to wait until they reorder and will not be able to take immediate advantage of more favourable rates.
So it’s a case of swings and roundabouts and since we are in total control of our buying price at the moment of sales and purchase, the situation is currently in our favour.
Views from the EU
The UK is no longer a dominant exporter and as predominantly importers, we need good relationships with our European neighbours and to rebuild any bridges unsettled by the Brexit vote. Fortunately, we have excellent relations with our German and Italian suppliers. They recognise the value of the UK market and the great relationships that they have built with us here at InHouse and every single one of you, our retailers. Rest assured, they are just as keen to protect and support these bonds and continue with the success we have all built in the last few years.
The role of the media
We are a nation of fighters. Britain has always been resilient and the Brexit decision is simply another test of that resilience. Don’t let the media cause fear and panic, their role is to create headlines and at a moment of national uncertainty, they are having a field day. We will come to terms with and deal with the outcome, then we will adapt to the future.
Let’s be realistic. We may well be able to push through with confidence but the British public may not be feeling quite as secure. The most damaging consequence of the Brexit decision is that people may delay spending on moving house until they feel more certain about their own financial future. And if consumer spending falls, it could tip us back into recession.
What we have to recognise is that the likely outcome is that imports will become more expensive. This includes products that are assembled or manufactured in the UK using European components. So we’ll all be in the same situation.
But we do things differently. That’s why we are invested in building brand awareness, because people buy a brand they connect with. They know that Made in Germany means the very best product quality, with designs manufactured for longevity. Price is important and uniquely, our comprehensive range of products means that we can meet the budgets of our customers. We give you all four key ingredients to grow your business – Price, Brand, Quality, Longevity – and that’s why, in the last recession, we created success when others failed. No matter the difficulties that this great British nation may face as a result of the vote to leave the EU, we will all succeed.
Onwards and upwards
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