Brexit (when and if it happens) will undoubtedly have an impact on people’s spending habits. What this impact is remains to be seen, but we all do crazy things for love, right? Arguably, the one certainty is that people will still want to get married…says Michael Cahill
Post Brexit or no Brexit, those in the industry need to consider many things including whether the number of people getting married will change. Will the average spend change? What impact will Brexit have on their ability to provide their service to customers? For some this may bring opportunities and for others it may present a significant threat to their business.
Interestingly, the Office for National Statistics recently reported the graph below as a representation of their own findings on how Brexit will affect growth in the wider UK Economy.
The lack of clarity around the UK’s exit from the EU means that predicting the future is extremely difficult and planning for the different scenarios is challenging. What we can say, however, is that the general view of the future post Brexit is one where the UK economy will contract for the next few years to come.
Some key areas for those in the wedding industry to consider include:
1 Exchange rates are at an historic low level and are likely, but not definitely, to remain at these levels. If exchange rates fall further, the cost of getting married abroad will be more expensive and UK-based weddings will be more cost competitive.
2 If exchange rates fall, the cost of importing goods from abroad will become more expensive.
3 Restricted movement of individuals could mean that some businesses, including those involved in design and hospitality, could have a lack of available workers or face an increased cost, which may need to be passed on.
4 Time delays on imports of goods could occur due to stronger border controls.
Destination Weddings – should I stay or should I go?
One of the biggest and most notable immediate effects of Brexit is likely to be the fluctuation of the exchange rate. When the vote was announced that Britain had decided to leave the European Union, the pound dropped steeply against other major currencies including the Euro and the US Dollar. If this is repeated, or the pound remains at historically low rates, it could have an effect on whether couples choose to stay in the UK for their wedding or head off to sunnier climes to tie the knot and celebrate.
Destination weddings have been on the increase despite the falling strength of the pound making them more expensive. But if Brexit tightens the purse strings of the British public further, more couples may decide to stay at home and get married in the UK – either because their own budget is restricted, or perhaps it is more difficult for their friends and family to be able to afford to join them for their big day.
It is now believed that in addition to the 300,000 British couples who marry on their home ground, a further 100,000 ¬ – one in four British couples – may just decide to stay put rather than venture further afield.
In the majority of situations there will be winners and losers. Whilst the weak sterling may mean UK couples lose out as the cost of going abroad is more expensive, it could mean that foreign nationals are more attracted to coming to the UK for their wedding, particularly as the UK is seen as a place with great heritage and tradition.
A possible positive: An increasing demand from overseas couples looking to come to the UK to get married would give a welcome boost to the industry.
Suppliers – will we still get value for money?
In addition to exchange rate movements affecting how couples spend their money, business owners may see an impact on the cost of items from suppliers, which may, in turn, need to be passed on to the end customer.
Two key areas to consider are the costs of goods imported and the availability and cost of labour from the EU.
As a whole, a greater percentage of the goods imported by the UK come from the EU. The parliament.UK website states that in 2017, 53% of all UK imports came from the EU, compared to 44% of all UK exports going to the EU. Even small changes in the costs of imports will, therefore, have an effect on the UK economy.
Two of the larger wedding areas likely to be impacted are the hospitality and fashion industries. Imports, even if indirectly, will affect the hospitality industry due to an increase in the cost of products being used, mainly food and drink. It is believed that, depending on the type of Brexit that takes place, food prices will rise between six and ten percent meaning a large increase not only on a consumer’s weekly shop but also on costs in the hospitality industry.
A possible positive: This does, however, create an opportunity for UK food and drink suppliers to grow their market share as the prices of their products could be much more competitive in the market place. A prime example of this could be an increase in the cost for imported items such as Champagne, resulting in an opportunity for alternative products, such as English sparkling wine, to be given greater consideration as an option.
Affects on the hospitality sector
The hospitality industry also employs a large number of foreign nationals and one of the potential outcomes of Brexit is that overseas workers will be discouraged from moving to the UK and there will be a smaller pool of people from which to recruit. The dynamics of supply and demand will mean that where demand is high and the supply is low, staff are likely to demand higher wages. Higher wages and additional costs, such as the cost of VISAs, can all add to the costs for an employer.
With margins being squeezed for all businesses during an already difficult financial climate, this is likely to mean that the additional costs cannot be absorbed and inevitably, it may need to be passed on to the couple to be married.
A possible positive: There could be more job opportunities – and part-time options – for UK residents. With training schemes put in place new and valuable talents could emerge.
One of the biggest costs after the venue for most couples is, of course, the dress. The British fashion industry as a whole, employs a large number of foreign workers within the UK – currently, it is believed, more than 10,000, a number of which are highly skilled.
At any time, the best talent can be hard to find and with the movement of employees becoming harder it could mean that these expert and creative workers are discouraged from coming to the UK for work and choose to remain overseas. A shrinking pool of talent entering the UK to work in the fashion industry is likely to result in an increase in the cost of employment and a trading environment in which UK fashion houses will need to meet the challenge in order to remain competitive.
A real positive: Bridal, of course, is very different to general mainstream fashion and has the advantage of fulfilling a cherished dream. Brides in search of bargain prices will, undoubtedly, still be sure to find them, and those looking for high quality and designer-driven labels will continue to be woo’ed by the retailers who deliver on their promises of service. And, with an increase in the number of UK bridal brands choosing to manufacture, or part manufacture, here in the UK, those brands will find themselves in a better position to control costs, quality and lead times.
Longer lead times?
In the modern day where the world is much ‘smaller’, overseas suppliers for anything from a ring cushion to bridesmaids’ dresses are more frequently used. Whilst – especially with lower-priced items – the cost increase may not be as noticeable, changes to importing arrangements and increased border checks could result in longer delivery lead times than before Brexit. Any company importing goods needs to understand what impact this will have on their business and plan accordingly.
A possible positive: Forward-planning is vital. Once a retailer establishes new schedules that specify achievable order-to-delivery timings, they can avoid sudden delays and letting customers down. The greatest positive, however, could be an increase in quality products from domestic suppliers.
Forecasting for the future is extremely difficult, after 29 March 2019. There are many possibilities, which include a deal with Brexit, a ‘no deal’ Brexit, or even the distant possibility of no Brexit – and all could have wide-ranging effects on exchange rates and the movement of goods and people.
The future is very uncertain at present, but there is one thing for sure: hundreds of thousands of people will continue to marry each year. The more we can do to inspire confidence and a sense of calm that all those Big Days will go without a hitch, the better.