With the world reeling over the Brexit decision, people are now trying to figure out what it truly means. With no surprise, the decision will have a large effect on the fashion industry.
Photo credit: bbc.com/news
On Thursday the 23rd of June a referendum was held to decide whether the United Kingdom would leave the European Union. Following the Brexit decision the British pound hit its lowest point in decades, which consequently sent the stock market plummeting. With London being a major player in the fashion industry, it is understandable that the decision will strongly impact the industry, in fact, it already has.
The fashion industry contributes an estimated $38 billion to the UK economy according to The Business Of Fashion. While the weak pound will affect all businesses in some way, luxury businesses will feel the greatest effect. Many UK-based designers often source their fabrics and other materials from other countries in the EU. With the future introduction of new trading agreements and tariffs, it will be interesting to see the effect Brexit has on the fashion industry. The night before the Brexit vote was undertaken the British Fashion Council surveyed all of its members, with 500 designers opening the survey and 290 completing it. The results found that 90% of members who completed the survey wanted to remain a part of the EU.
“This is not good for the luxury goods companies and if we look at the trading of the shares of the luxury goods companies, probably this Brexit decision will increase the pressure of the market going down, probably the luxury goods companies valuation will falter in the short term amidst this volatility.” – Mario Ortelli (senior research analyst at Sanford Bernstein)
Sid Bryan and Cozette McCreery, the designers for Sibling, wore shirts reading “In” to show their opposition to Brexit after their show in London. Photo credit: nytimes.com
After the massive drop in the value of the pound, fashion companies felt the effects of the Brexit decision. If the pound continues to fall it will mean that the cost of clothing, footwear and accessories is likely to increase. A weaker pound will force fashion companies to spend more money, to create the same amount of clothing, at the same quality. This will ultimately effect consumer-confidence, as these businesses will have to raise their retail prices, making up for the additional costs.
Kering, world leader in luxury, sport and lifestyle brands like Gucci, Saint Laurent and Bottega Veneta, recently stated that, “While it is too early to further comment on the implications of this referendum on the luxury business, Kering is confident in its ability to adapt to this new environment. (We) will continue to welcome initiatives to bolster collaboration, be it with regards to trade, talent or the exchange of ideas.”
Brexit will definitely have a major impact on the importing and exporting of fashion goods, with the arrival of new trade agreements in the future.
People take to social media to comment on the coincidental crash of asos.com. Photo credit: Look.co.uk
Many designers based in the UK use seamstresses and other skilled individuals from all over Europe. Brexit will mean that these designers will now have to obtain visas for their employees. For business trips and especially events like fashion week, it will mean that there will be numerous barriers that may come into play depending on the decisions made in the coming years.
The Brexit decision will also have a huge impact on UK based online retail superstores like Boohoo.com, Missguided.com and Asos.com. In fact, the same week that the decision was made, Asos closed their website and app. Many people believe that this was due to the sudden drop in the British pound. However, when speaking to Fairfax the business stated that it was “because of a power outage at a third party data centre that hosts our servers.” For Australians, sites like these become easy and cheaper options for online shopping, as a result of the pound devaluing.
Vivienne Westwood takes a stand on social media. Photo credit: @viviennewestwoodofficial
Brexit will even have an effect on the education and training of people in the fashion industry. Over the years, millions of pounds have been granted to numerous London fashion schools and colleges by the European Regional Development Fund (ERDF). This money has largely gone towards research funding and innovation initiatives.
A recipient of these funds is The London College of Fashion, who use the funds to help students realise opportunities that can be found in the global fashion industry. Another organisation, which is sponsored by the ERDF, is the British Fashion Council (BFC), which is the organiser of London Fashion Week and many more fashion initiatives.
In addition to the loss of funding, the Brexit decision will most likely make it harder for international students to study in the UK. Currently EU students only have to pay the same fees as British students. However, in the future we would see EU students having to pay the same rate as other international students, which will most likely lead to many talented students not studying in the UK due to costs. With the fashion industry being a global and multi-cultural industry, it is important that students are able to easily study internationally.
With the decision only being made several days ago it is hard to truly determine the effect it will have on the fashion industry. At this point it is easy to see that it will affect travel, trade, education, online trading and consumer confidence. While there seems to be many adverse affects for the UK fashion industry, there may be many more opportunities created for French and Italian brands in the global market. It will be interesting to see how much further the Brexit decision will affect the global fashion industry.