Could Brexit spell good news for Irish retailers?

The EU referendum result has caused consternation for UK businesses, with a resulting period of economic uncertainty as economists, policymakers, businesses and consumers alike await to see how the next steps for Brexit pan out.

Could Brexit spell good news for Irish retailers

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Not just doom and gloom

In an aftermath of doom and gloom from many quarters, there has been some positive news for Irish retailers, who might actually find themselves well positioned to benefit from the UK’s exit from the EU.

Ireland can benefit from currency fluctuations

Thanks to the recent plunge in sterling, combined with the anticipated ongoing weakness of the British pound, Irish divisions of large UK retail companies could become increasingly profitable for their parent firms. Ireland was already an attractive market for many of the big UK retail tycoons and it now looks more attractive than ever, with cash flow and profits both being generated in euros. This means that imports are also effectively cheaper and British retailers operating in Ireland can benefit from the currency differentials. It looks likely that UK retail chains will leave their euro pricing unchanged for the time being as a result, using the weaker exchange rate to benefit competitively through elevated profit margins.

Most of the big UK retailers have sizeable operations in Ireland, including Argos, B&Q, PC World, Next, Homebase, Poundland and Tesco, which is actually the biggest employer in the private sector and has over 150 stores staffed with over 14,000 employees.

These businesses have already been active in slashing their operational costs, trimming away excesses and doing business in as lean and efficient a way as possible. There is also a possibility that British retail brands might use the European exit result to invest more heavily in their Irish business streams to drive up profits and revenue – especially if local operations can provide their own investment without needing parent bodies in the UK to convert sterling to euro at unattractive rates.

Perhaps retailers, their suppliers and businesses that provide shopfitting in Dublin, such as, should not be worrying just yet.

The crunch point ahead

The coming months will be the crunch point as the impact of ongoing currency fluctuations, consumer confidence, the anticipated interest rate change and economic uncertainties begin to iron out and create a clearer picture of the immediate post-Brexit result economy.