With Brexit, will London fashion’s costs rise?
Burberry is one of the top 10 most valuable luxury brands in the world, it is the UK’s number one luxury retailer by revenue, with a total brand value of over $3.2 billion. The luxury goods company operates more than 500 stores in over 50 countries worldwide. The firm designs, sources, manufactures and distributes luxury mens, womens and childrenswear and non-apparel accessories globally through its own retail stores, concessions and wholesale customers. The famous Burberry coat made of peacock feathers sells for approximately $35,000.
This can all be in jeopardy with Brexit. The vote is in and Great Britain is officially leaving the European Union. For those who’ve followed the Brexit story no one knows for certain what, exactly, will happen, but it’s probably safe to say some serious global economic changes are on the horizon.
For fans of British fashion, like Burberry, those changes could mean a serious shake up of the UK’s $38-billion fashion industry, an industry that resoundingly wanted to stay in.
As Elle.com reports:
In the week leading up to the vote, the British designers of Sibling, Sid Bryan and Cozette McCreery, took to the runway of their Men’s Fashion Week show in T-shirts saying “In,” to show their opposition. In February, Christopher Bailey of Burberry was one of more than 100 business leaders to sign a letter in the Times of London that argued, “Britain will be stronger, safer and better off remaining a member of the EU.”
And as for British luxury brands, a deep slide in the pound against the euro could be disastrous, mainly because much of high-end fashion is manufactured in Italy and other countries in Europe. As it is, the luxury sector worldwide is already in a bit of a neutral zone, with brands like Prada and LVMH, reporting meager 4 percent first quarter growth this past April. For British brands, a slowdown in the luxury sector coupled with higher production costs could be devastating.
A side note, beyond the issues of currency exchange, there is also the matter of trade agreements. Stepping out from the EU banner means that Britain will now have to renegotiate all of them which mean a lot of extra bureaucracy to basically get back to point zero. Also under a microscope are the current European Patent system and the EU Trade Marks system. Granted the UK will likely set up some sort of provisional system but that’s still a lot of headaches for British fashion brands and designers to contend with while also navigating financial uncertainty.
“We now have a role to play in keeping government updated on our industry’s priorities and keeping the designer community updated on any likely impact to business as our country prepares to leave the EU over the coming years,” said Caroline Rush, CEO and CBE of the British Fashion Council.
Worst case scenario, we see a contraction in the British fashion industry and some of our favorite UK brands either disappear or become insanely expensive. In either case, it looks like bumpy times ahead.