An Analysis of Brexit's Impact on the UK Retail Sector

This essay examines the multifaceted impact of Brexit on the UK retail industry, focusing on the effects on Sainsbury's and the broader retail sector. It analyzes the consequences of import and export tariffs, changes in market dynamics, and the role of government intervention in addressing market inefficiencies. The essay explores the impact on product availability, pricing, and the movement of UK industries to the EU. It also considers the effects on employment and the shift in trade policies post-Brexit. The analysis covers the effects on communication costs and potential EU tariffs based on UK labor and environmental standards. The study highlights the economic repercussions and challenges faced by the UK retail industry in the wake of Brexit, providing a comprehensive overview of the key issues and consequences.

Discuss the impact of Brexit
on retail industry

ABSTRACT
Brexit originated from two words which are British and Exit. This essay will throw a
light on Brexit that happened between UK and Europe. This essay will discuss about the impact
of Brexit on the retail industries of United Kingdom. Also this will brief about the action that
government will need to interfere in this matter or not to address any inefficiencies of market.

Table of Contents
INTRODUCTION..........................................................................................................................4
MAIN BODY..................................................................................................................................4
Impact of Brexit on Retail Industry............................................................................................4
Government Intervene to remove Market Inefficiencies............................................................6
What’s in Brexit deal..................................................................................................................7
Effects of Brexit..........................................................................................................................7
CONCLUSION...............................................................................................................................8
REFERENCES...............................................................................................................................9

INTRODUCTION
Brexit establishes with two various words which are Britain and Exit. It is a withdrawal of
the United Kingdom from the European Union (Clarke, and et.al., 2017). It is discussed in 2016
but confirmed in 2020. Brexit done through voting system which is happened between the
citizens of UK and maximum votes goes in the favour of Brexit.
Sainsbury is one of the largest retailer in the market of United Kingdom which deals in
grocery items. The objective and mission of Sainsbury is to provide a good quality service to
their customers so that they are engaged with same store and give suggestions to people to join
with this departmental store. To attract the customers Sainsbury use so many techniques which
are as providing goods as lower price with good quality.
The Essay is critically discussed about the impact of Brexit on the Sainsbury as well as on
the United Kingdom. Then discussed about the government should intervene or not during this
Brexit process and the impact of government policies on the retail industry.
MAIN BODY
Brexit makes with two different words which are Britain and Exit, which means to exit
Britain from the European Union. European Union is a union of 28 countries. These 28 countries
have one currency that is Euro, but having separate parliament. On 30th January 2020, the UK
was separate from EU and the Brexit happened, this union was created in order to maintain the
peace in all the countries. The European Union has power to create the rules and policies and all
the countries has to follow their rules.
Before the Brexit all the countries are in group together, there was no border between this
country so people can easily trade together, work in any of the country and can live in any of this
Union part. Also there was only one currency to be used in all the countries.
Despite this some people were against the EU, the referendum was created and got
51.89% votes in favour of Brexit. This voting system is done 23rd June 2016 (How and why the
UK ended up planning a divorce with the EU?. 2021). The politicians play main role in Brexit
and influence the UK people to do favour to this concept.
Impact of Brexit on Retail Industry
Brexit impacts on the sales of Sainsbury’s which is a largest retail industry of United
Kingdom. The sales affected due to the custom import and export from the different countries of

the union. This retail industry has to pay more amount on the food product as it has to pay more
taxes and other country barriers.
The four major countries that covers in European Union are, Germany, Spain, Italy and
Austria. There are many products that affected due the Brixit, like the dairy products which was
majorly found in the mountains of Austria country, also Italy yields good quality of olive oil, so
like this major of their products are from different countries and therefore it got affected from the
Brexit.
As per the chief Executive of the company, from 1st of the January, the Ireland companies
to be stay in EU market, and rest all UK companies has to leave, that is the food products coming
from the different retail industries has to be checked on the border the food items has to be
inspected (Evans and Menon, 2017). Also this product should have a government standard
certificate to allow to trade in the countries. This certificate shows the health standard level. Due
to this the cost of products adds a substantial charges on their products.
The government of UK is pressurising the European Union to bring maximum flexibility
towards the issues.
After this Brexit, the investor was not supporting the idea of Sainsbury during their
attempt of merging the company with the Asda. Asda is the biggest competitor of Sainsbury in
the market. Since the market of Sainsbury was going down, the company decided to invest in
high growth area like, installing bakeries, door to door availability, and other fresh food counters.
They have reduced their debt and increases their investment, that faced the empty shelves and the
lock of the staff members (Bloom, and et.al., 2019). Later the Amazon enter into the market, and
other retail industries also expanded their market like Tesco and Morrison’s gaining huge profit,
therefore Sainsbury fears that they may lose the market. Some people also thought that the
Sainsbury should hit up the market as this company sits in the middle of the market country.
This is also found that the Sainsbury’s supplies their dairy items to the market in
Northern Ireland got affected due to the Brexit.
According the data, Sainsbury is currently one of the best performing supermarket in the
country (Renwick, 2017). The data was recorded on the basis of year analysis and found this
result. Data also describes that this company is growing very fast and also increase its rate of
sales during their promotions as compare to other supermarkets. As the retail industry produces

the fresh products in the particulars. Though the Sainsbury fallen out in some cases but the
performance shows that the company is improving.
The Brexit shows similar effects with the other retail market as well, but some retailer got
most affected from this, which result in impact on the growth of the their retail industry and
lower down the GDP of the country (Fernández, Paz-Saavedra and Coto-Millán, 2020). This
majorly impacted the people to survive there there as the prices of the products goes up and the
shorten of the products availability as well. The local people are those who supported to bring
this law, in order to make the UK as a separate from the European Union.
Government Intervene to remove Market Inefficiencies
The government can play a major role in changing the market situation. The government
can engage directly (like buyer or seller of good and the services) or indirectly in the market (like
subsidy, taxation and other factors).
The government has to take in order to avoid blocking the food items in the border and
applying taxes on that. The taxes and subsidy increased the cost of the products.
The government removes the export import limit, which helps the retail industry to
transport their good and services without any limit, that helps them to increase their sells and
boost their growth.
The government has to interfere in the Brexit to stop malfunction, price crises between
the companies. To maintain an effective relationship between the United Kingdom and European
Union, the government has to intervene in this. Also the one union one government helps to trade
the food products from one country to other (Dupont and Moore, 2019). This will also help in
selling products without any certificate. From the fear of the government, companies will not
take any wrong action towards their business. If government involve in this, then they can
provide access to someone to work in any country. This create the lot of job opportunities and
increase the financial condition as well.
When the new rules were not defined that time both countries agreed to keep most of the
things same until the new rules stablish. This will get both the countries will get enough time to
agree on the terms of trade. The decision was still to be made based on the data sharing and with
the financial terms and conditions, with this they have to agree on their agreement. Post Brexit
the agreement was signed that there will be zero quota limit on the goods and services. This
means the UK retail companies have right to sell and purchase there product without any limit.

What’s in Brexit deal
The rule is created that the people can work and live in anywhere either in UK or EU. It
is also mentioned that if someone is staying more than 90 days then only there is need of
passport, otherwise they can go and come back without any formalities.
It is also stated that Northern Ireland has to follow many rules that are defined by EU
earlier, so as to avoid any crashes in the border (What’s in the Brexit Deal?. 2021). This covers
that the goods can go to the any part of Northern Ireland from the UK.
Now UK can set their own trade of policy and can deal with any other countries. The UK
now has the right to create the law and any excise import export duty on their trading of the
goods and services. Their trade with the US, Australia and other countries currently don’t hold
any free trade.
Effects of Brexit
Tariff on Import and Export
After the Brexit, the trade will be difficult between the EU and UK, the tariff will be
added in import and export of united kingdom, which will majorly effect the cost of the
production of retail industry. Since the UK imports one thirds of their products from the
European Union. The retail industry majorly depends on the other countries product, and with
this the trade between the countries will impact on the regular essential items.
Movement of UK industries to EU
In general the companies of UK would have to bear a huge loss because they cannot
participate in the bidding for the public contracts in the rest of the EU countries. Neither can they
access the rest of the EU markets nor can they employ workers from the rest of EU in their
countries. Owing to these loss the retail industries of UK moved to the EU or the Ireland because
the Ireland is still the part of the EU. That makes their trade easy and the increase the count of
the customers there.
Employment decreased due to Brexit
In terms of jobs, there is a huge loss for the citizens of UK people, because when UK
was part of the EU, any citizen can find their job in any of the country, because there was no
border, it was free movement for the citizens from one country to another country. But after the

Brexit the rule was setup that the UK country has no right to work in any country without any
passport, but there is free visa movement in the EU countries.
After the Brexit, the UK has their own rules and policies. Now UK need not to be follow
with EU rules and regulation. The market will get divide into two separate space with distinct
regulations. Before the Brexit the UK does not hold any rights to trade outside the EU, but after
Brexit UK has complete right to trade.
Before the Brexit the telephonic communication between the retailers from one country
to other was like the communicating within the country, but post Brexit the communication
between the retailer also effected by roaming charges. The retailers has to pay the roaming
charges during their telephonic communication.
After the Brexit, the EU will observe the workers right and environmental factors of UK,
if EU found that condition of UK is not good in terms of workers and retail industry, then they
may enforce some tariff plan on their import and export.
From all the above reasons, there was an immediate impact was seen on the economy of
the UK when the vote of the Brexit happens. A study of 2018 reveals that there was a loss of
2.25% of the GDP on UK’s economy. The investment drops down by 6%, unemployment raises
by 1.5% and reducing the per capita by 1% (Brexit to take much bigger GDP hit from Brexit than
the EU- Commission. 2021).
CONCLUSION
From the above Essay, it is concluded that the Brexit was not in favour of retail industries
of UK. As the Brexit affected the sales of the retailers in terms of creating barriers for import and
export between United Kingdom and European Union. The employment rates goes down after
the Brexit as they cannot go to other countries without their passport.
The government should intervene in order to handle all the border related issues and to
decrease the tariffs over the import of goods and services in UK. The government should also
helps retail industry for their easy trade with the European Union that helps to boost the economy
of the country.

REFERENCES
Books and Journals
Bloom, N., and et.al., 2019. The impact of Brexit on UK firms (No. w26218). National Bureau of
Economic Research.
Clarke, H. D., and et.al., 2017. Brexit. Cambridge University Press.
Dupont, C. and Moore, B., 2019. Brexit and the EU in global climate governance. Politics and
Governance. 7(3). pp.51-61.
Evans, G. and Menon, A., 2017. Brexit and British politics. John Wiley & Sons.
Fernández, X. L., Paz-Saavedra, D. and Coto-Millán, P., 2020. The impact of Brexit on bank
efficiency: Evidence from UK and Ireland. Finance Research Letters. 36. p.101338.
Renwick, A., 2017. The process of Brexit: what comes next. London: UCL European Institute:
Working paper.
Online
Brexit to take much bigger GDP hit from Brexit than the EU- Commission. 2021. [Online].
Available through <https://www.reuters.com/article/uk-britain-eu-growth-
idUSKBN2AB18K> [Accessed on 24th April, 2021].
How and why the UK ended up planning a divorce with the EU?. 2021. [Online]. Available
through <https://www.business-standard.com/about/what-is-brexit> [Accessed on 24th
April, 2021].
What’s in the Brexit Deal?. 2021.[Online]. Available through < https://www.bbc.com/news/uk-
politics-32810887> [Accessed on 23rd April, 2021].