Impact of Brexit on UK Retailers: Tesco's Import and Export Analysis

This dissertation investigates the impact of Brexit on the import and export practices of UK retailers, with a specific focus on Tesco. The study begins with an overview of Brexit, its background, and rationale, outlining the research aim, objectives, and questions. It then delves into a literature review, exploring the concept of Brexit and its influence on the UK, analyzing the changes in import and export practices, and identifying the challenges faced by Tesco. The research methodology is detailed, followed by data interpretation and a conclusion summarizing the findings and recommending strategies for Tesco to address post-Brexit issues. The dissertation covers various aspects of Tesco's operations, including the impact of Brexit on its supply chain, consumer confidence, and financial performance, providing a comprehensive analysis of the challenges and opportunities presented by Brexit for the retail giant.

Dissertation
1

CONTENTS
Contents...........................................................................................................................................2
CHAPTER 1: INTRODUCTION....................................................................................................3
Overview of the study..................................................................................................................3
Background of the study..............................................................................................................4
Rationale......................................................................................................................................4
Research aim................................................................................................................................5
Research objective:......................................................................................................................5
Research questions.......................................................................................................................5
CHAPTER 2: LITERATURE REVIEW.........................................................................................5
The concept of Brexit and its influence over UK........................................................................6
Several changes that Brexit bring within the import and export practices of UK.......................7
The challenges that Tesco is facing after Brexit in its import-export practices..........................9
Recommend the ways that Tesco can adopt to deal with post Brexit issues.............................10
CHAPTER 3: RESEARCH METHODOLOGY...........................................................................12
CHAPTER 4: DATA INTERPRETATION..................................................................................16
CHAPTER 5: CONCLUSION......................................................................................................22
REFERENCES..............................................................................................................................25
Error! Hyperlink reference not valid.Contents...........................................................................2
Error! Hyperlink reference not valid.CHAPTER 1: INTRODUCTION....................................3
Error! Hyperlink reference not valid.Overview of the study......................................................3
Error! Hyperlink reference not valid.Background of the study..............................................4
Error! Hyperlink reference not valid.Rationale......................................................................4
Error! Hyperlink reference not valid.Research aim................................................................5
Error! Hyperlink reference not valid.Research objective:......................................................5
Error! Hyperlink reference not valid.Research questions.......................................................5
Error! Hyperlink reference not valid.CHAPTER 2: LITERATURE REVIEW.....................5
Error! Hyperlink reference not valid.The concept of Brexit and its influence over UK........6
Error! Hyperlink reference not valid.Several changes that Brexit bring within import and
export practices of UK.................................................................................................................7
2

Error! Hyperlink reference not valid.The challenges that Tesco is facing after Brexit in its
import-export practices................................................................................................................7
Error! Hyperlink reference not valid.Recommend the ways that Tesco can adopt to deal
with post Brexit issues.................................................................................................................7
Error! Hyperlink reference not valid.REFERENCES............................................................8
3

Reflection 4:
I am very happy that I got this opportuinity for being a part of this project which not only
help in getting me aware about the several kind of bio tecghnology that are used within
agricultural industry for imrproving iots practices but also support me in getting my personal
development doen throughout this project. The experience throughopit this project was great and
I presented my learning and experience with the help of self reflection which is presented below:
Personal reflection
In order to execute this project a team was formnulated which work toward gathering the
infomrtaion and try to provide action that can be takern to overcome the challenges or ixssues
that agricyultural industry is already facing wit
So, to continue with this in future I made certain views abouit the things that I will perform in
ordre to approach a team work.
. Other than this I decide to give equal chance to each individual in team for keeping their view
point nad suggestions toward a particulat and I will value them so that more coordination in team
can be established whichj not only help in reducing the burden of worek but also allow in
perfoming it well.
Topic: - Assessing the export and import of goods and services within UK retailers after
BREXIT and the affections on Tesco
CHAPTER 1: INTRODUCTION
Overview of the study
Brexit is basically term used for the decision of British country i.e. UK to leave the
European Union in order to operates its trade and other economic practices by their own. This
action of United Kingdom has make them free from the restrictions, rule and regulation that they
required to follow being a member of European union. But despite of all these benefits, Brexit
has also bring numerous of issues which make it suffer from years (Cowie and et,. al., 2018) .
The main impact can be seen over the economy of country which get slow down due to this
4

event as the trade practices get affected and majority of business moved their headquarters to
EU. As a result of which the economic growth of the country has slow down by 2.4% as marked
in year 2015 to 1.5% in 2018. Addition to this the British pound fell down which leads to the
increase in inflation rate within the country (Brexit Consequences for the U.K., the EU, and the
United States, 2020). Other than this it is also estimated that Brexit would eliminate the Britain
tariff free trade status with the countries belongs to EU. Hence, it is expected that the tariffs
would raise the cost related with exports within EU countries as the goods sold by UK traders
will also get expensive in Europe. Addition to this the tariff would also increase the price of
imported good in UK as more than the one third of the goods come from Europe within UK.
This increase in import price increase the inflation rate as well as lower down the living standard
of people within UK.
The Brexit has bring up negative influence over the country in term of affecting its social
as well as economic factor badly. This influence not left away even the supermarket or discount
stores that are offering products to its customers at lower price as the Sterling is keep on
fluctuating. With this no deal Brexit seemingly on horizon, supermarket will be the first place
that get affected as around 79% of the imported food items are being imported from the EU
countries. Despite of this for E-commerce this means that the goods from UK To EU will not be
sold within the internal market, but it will be done from the third country to EU (Business After
Brexit: What Changes for UK Businesses? 2020). Hence, the custom duties might get applied
over the trade performed by UK country which make it more expensive for the retailers of the
country, especially for those retailers who sell their products to the countries like France and
Germany. As from now after Brexit they have to struggle for remaining competitive as EU
customers are getting more attracted toward the more affordable products that are being offered
by the other state members where they do not require to pay additional charges over their
purchases. The cost of exporting to EU will highly influence the capacity of the retailer to thrive,
as they won’t be able to form yup a strategic partnership with other successful brand. At the end
of this the import to as well as export from the UK will suffer badly after this non deal Brexit
happens.
Background of the study
The Brexit brings up larger number of challenges for the retailers that are performing
their business operations along with the EU countries as the conditions of trade get changed after
5

this event. Hence, in order to further determine this influence and changes that import and export
trade practices of UK has faced after Brexit deal, the study is conducted by concentrating it over
a giant retailer TESCO. It is a British multinational grocery and general merchandise retailer
which is headquartered in Welwyn Garden city, England, UK. It is considered to be world’s third
largest retailers in term of revenue. It maintains it stores in seven countries from Asia and Europe
and consider as the leader of groceries within UK where it holds up the market share of around
28.4%. It maintains its operations in several areas like retailing of books, electronics, furniture,
clothing, toy, petrol, financial services, software, internet and telecom services. But its main
offering is related with food and groceries items which get highly affected by the Brexit impact
(Cowie, Mulvey, Peck and Shaw, 2018). As around 30% of food comes from EU and the British
Retail consortium has warned that checks in from France may delay the delivery of perishable
food items such as fruits and vegetables. Hence, the Brexit effect leads to reduction in suppliers
of fresh food, which increase the price of these items in country (Gartzou-Katsouyanni and et.
al., 2018). This crashing out of EU would create huge issues for TESCO in two manner such as
influence over consumers confidence and value of sterling which reduce customer spending. To
further generate understanding regarding it this study has been conducted which put emphases
over the influence that can be seen over import and export of good within UK after Brexit.
Rationale
The main purpose behind conducting this investigation is to determine the changes that get
anticipated within the trade practices of UK after Brexit. The major concern is toward the
changes get anticipated within the import and export practices after Brexit as this area is highly
get influence with this event because majority of trade practices and flow of good or services are
being performed in between EU countries and UK as compare to other countries. This will help
in developing an understanding regarding the challenges that TESCO is facing after Brexit and
manner in which it is coping up with this within business. This further support in identifying the
propensity of risk which is present for the retailers in UK market that perform their import and
export deal with the EU countries.
Research aim
To investigate about the export and import of goods and services within UK retailers after
BREXIT. A study of Tesco plc.
6

Research objective:
 To explore about the concept of Brexit and its influence over UK
 To determine several changes that Brexit bring within import and export practices of UK
 To identify the challenges that Tesco is facing after Brexit in its import-export practices.
 To recommend the ways that Tesco can adopt to deal with post Brexit issues.
Research questions
 Explain about the concept of Brexit and its influence over UK?
 What are several changes that get anticipated within import and export practices of UK
after Brexit?
 What are several challenges that Tesco is facing in its import-export practices after
Brexit?
 Describe about certain ways that can be adopted by Tesco to deal with the post Brexit
issues?
CHAPTER 2: LITERATURE REVIEW
Literature review is considered to be most significant part of a study as it helps in
developing an understanding regarding the current area of study by focusing over performing a
review of already available information. It mainly performs an analysis of information which is
already being investigated and presented by some other scholar over similar kind of study, so
that the investigator of current study will get an idea regarding the path that they required to
follow for performing investigation and area they require to explore. It helps the investigator in
getting a =n idea regarding the nature of study so that they could perform further investigation
much effectively by considering it as a base. This support the investigator in determining the gap
within the previously performed study so that those gaps can be cover up by conducting this
present study. This in turn also provide an idea to the investigator that what actions or method
they must adopt in order to collect data for performing the further investigation.
The concept of Brexit and its influence over UK
According the information presented by the Amadeo. K., 2020, Brexit is a word that
denote the action taken by British government to get exit from the European Union which take
place completely by year 31 January, 2020. This exit process merely starts when the United
Kingdom has appeal with the EU to leave the association of countries. This action was taken by
UK because the residents has decided that the benefit of belonging with the unified monetary
7

body will no longer be over weighed the cost related with the free movement with the
immigrants. This action was taken by UK with an aim to change its relationship with the EU
countries in term of its migration, trade and security as residents of the country find it difficult in
performing this as well as experiencing losses. This agreement consists of several terms within
this agreement that UK has to follow from the time it leaves the union. One of them was that UK
will not remain the part of custom unit with EU But this will remain allowed to the Norther
Ireland. This means that there would be a custom and regulatory border among the Norther
Ireland as well as Great Britain from the Irish sea that mainly include VAT. Addition to this EU
and UK will also perform negotiation over the trade agreement where both the parties have to
pay off the tariff when even any import or export practices get performed among them.
The main reason behind leaving European union was that the working-class residents of
England are conscious about the free movement of refugees as they claimed to government that
people from poor countries are moving to UK in order to get job and other benefits. Other than
this the small enterprises also getting it difficult to manage their profit as they have to pay off
high fees to EU and there remains a believe among the residents that UK pay more to EU then
actually it receives, so decision was taken to leave the EU. The Brexit will bring up negative
influence over the country as its economy get slow down and several businesses moved their
headquartered from UK to EU. This bring up direct influence over the factors like jobs, trade and
growth. It also affected the economic growth of UK as British pound fell from $1.48 within a
single day that results into increase in import price.
On the other hand, Benjamin Mueller, 2020, stated that Brexit brings up several changes
as majority of Britain’s export practices are being performed within Europe and for EU, UK is
the major sources of FDI and due to the membership of UK in EU make London as the financial
hub globally. But after Brexit majority of businesses leave UK which in turn leads to huge
downturn in the employment and economic condition of the country. It ends up with affecting
the social as well as economic growth of the UK badly and also cut down the chances of people
to expand their business by performing free trade practices within EU countries and dream of
several young students of UK to study abroad.
Several changes that Brexit bring within the import and export practices of UK
On the basis of the information expressed by Allas, T., Chinn, D., and Mikkelsen, D.,
(2019), it has been analysed that BREXIT has brought numerous of changes within the trading
8

pattern of UK especially in terms of export and import of commodities across the globe.
BREXIT has brought certain shift in the functioning of UK as earlier it was high connected to
the EU and maximum of its activities were being performed by them with EU only. It has also
been seen that maximum of workers and labourers working in the UK were the native of EU
only as they are easily hired by UK companies at very cheap rates. But, at the same time it has
been realised that UK has brought range of megatrends and opportunities at global level as the
nation is completely free to indulge into trade with any of the country without any difficulty.
Earlier, that is before BREXIT, EU was not allowing its associated countries to indulge into
trade activities with the nation’s which are not linked with EU or shares positive relations with
them. One of the biggest challenges that has been seen in the export and import of UK is the
better approach to the fastest growing services as well as incorporation of digitalisation in the
trade activities. Also, the respective nation can easily make use of advance technology which
would directly provide higher contribution in the execution of supply chain that further supports
in remaining competitive across the world.
Apart from this, the article has further revealed that UK comes under the fifth largest
exporter across the world. It also has broad sector that covers all possible ranges from insurance
to food, beverages to chemical and pharmaceuticals. All of these are exported worldwide that
simply helps the company in gaining advantages at international scale. While, if it is emphasised
on the UK import zone, it has been determined that in this area it simply deals in clothing and
other sort of components that are used to manufacture cloths. Along with this, it has been
determined that UK’s exports services has been determined that value of its commodity export
has been doubled after the BREXIT. This has ultimately made it the second largest market share
nation in terms of its services at global level. Also, with the passing time the respective nation
has also diversified its export services in vast area. This simply includes financial and
professional services to the Information technology services. Advertisement zone to the research
and development area. All of these changes has been collaboratively contributed the GDP rate of
UK as they are growing at global level.
9

Figure 1Diversified export services of United Kingdom, 2017
(Source: Diversified export services of United Kingdom, 2017)
The above specified graph clearly depicts vast range of diversified services that have
been emerged in export list of UK after confirmation that they would separate themselves from
EU in order to attain growth freely at international scale.
In addition to this, it has been later analysed that UK is becoming one of the largest
exporter across the world who is dealing at digital delivered services at worldwide. The nation is
effectively making use of advance technology which is simply helping them out in bringing
revolution in the services that could satisfy users at higher extent. This has also reshaped the
overall global value chain in appropriate manner. Companies belonging to UK are bringing lots
of innovations in their working practices with the support of technology so that they can easily
develop their services as per the customers across the world and export these services for
attaining success in rapid manner. In order to make it easier businesses of UK simply adopts
supply chain management software which makes their functioning more smoother and better.
The overall information also depicts that UK is one of the fastest growing nation which has taken
initiative to develop them by getting separated from EU. Also, businesses belonging to UK must
emphasizes on bringing as much possible innovations in their practices so that they can
10

effectively develop themselves and improve the quality of products and services which are being
exported across the world.
The challenges that Tesco is facing after Brexit in its import-export practices.
According to the information presented by Conrad. A., 2017, the isolationist policies that
are associated with the Brexit is creating numerous of challenges for many traders especially for
the one who import or export their product and services to the countries related with European
union. Tesco is a largest British grocery chain which is facing major challenges because of
Brexit issue. As per the marketing intelligence firm thē consumers consider Tesco a brand which
is highly associated with the Brexit. This is so because it is the grocery retailer which is highly
being chosen by majority of people in UK due to its services. But as the no deal issues caused by
Brexit ha affected the grocery and food retailer to a larger extend among them one is Tesco who
is facing this issue. The main reason behind the severity of this issue is that almost half of the
food in Britain is imported within the country. Some of the major challenges that Tesco is facing
within import and export practices after Brexit are mentioned below:
High Tariff: - Due to Brexit the free trade relation of UK with other EU countries come
to an end which madly affect the import and export practices performed by country. The tariff
rate get increased and this increase in custom directly add up the significant stress and the cost
over the importing of groceries. But as Tesco is a low fair retailer it is quite difficult for it to pass
on the cost to the customers due to increase in its cost of import practices. Due to this scenario,
the food retailer profit would decline heavily due to higher tariffs, decline in relative value of
British pound as well as procurement bottleneck.
Supply chain issue: - The supply chain of British food industry is vulnerable to the
uncertainty which is caused by Brexit. This is so because the majority of food supplied to
country through EU countries but after Brexit these things are being blocked and several new
restriction are being imposed over this as the trade is not remain free from EU and Britain.
Hence, the supplies and transportation both get affected as they now take more time to deliver
material. Other than this the procurement or warehousing is also get difficult in those countries
which in turn affect the perishable food as they get spoiled when it actually reaches to the UK.
Hence, the supply chain practices are becoming very must difficult and most challenging for the
Tesco.
11

As per the view point of Weinberg. C., 2017, advocates of Brexit said that this event will
make the UK free from the shackle of the EU control which make Britain allow yo strike out its
own ne ‘Global Britain’ trading nation and can run such practices on their own term. But this
event has also bring up huge influence over the economy of country as well as over its trade
practices. This is so because the EU remains one of the largest trading partner and as per the
statistics it shows that it has around 44% of all UK export which is from EU in year 2017 and on
the other side 53% of all the UK import. This means that the post Brexit future will proves to
have more consequences for both the economy as well as the traders of the country that usually
import or export the product or services from EU countries. Hence this action proves to be most
challenging fro the Tesco as it is a giant retailer of the country and maintain around 27% of the
stake of its customer base within United Kingdom as a result of which it have to face more as
compare to another players. The major challenges that are present in front of Tesco is the decline
in pound price which make the outsources practices more expensive, other than this
disagreement of free trade with EU country has lead to reduction of supplier relationship as well
as increase in the cost of import and export practices. These all are the major challenges that
Tesco is facing current after Brexit which results into declining of its profit share within UK
market.
Recommend the ways that Tesco can adopt to deal with post Brexit issues.
According to the view point of Conrad. A., 2017, there are number of challenges that get
aroused in front of Tesco after Brexit event which have a bad influence over its business
practices as it imports majority of products from EU market under the free trade deal between the
countries. But after Brexit this deal come to an end which in turn increase the supply chain
issues, increase tariff cost for the import and export of goods and services which have a direct
impact over the profitability as well as growth of the company. Therefore, in order to deal with
these issues, the Tesco is recommended with some measures that it can take to deal with these
challenges. These recommendations are mentioned below:
 In order to deal with increasing custom cost Tesco can develop its new domestic supplier
relationship in order to source products locally that are high at risk for the highest post
Brexit tariffs. In addition to this Tesco is also required to maintain higher inventory level
in order to offset the risk related with the inevitable delays that accused at the ports due to
more onerous custom regulations. The UK mainly receives around 700000 inbound
12