Mark Price: Retailers must look beyond Brexit gridlock

Over recent weeks, Wilson’s phrase has never seemed more appropriate as both sides of the parliamentary Brexit debate have tried to move to outflank each other. Each twist and turn leads to new possibilities in a power struggle with many vested interests.

Rather than try to unpick all the machinations of Westminster, it is worth coming back to two fundamental facts.

The first is that a majority of MPs want to leave the EU with a deal.

“It is highly likely the majority of people in your business think they can, one way or another, improve on what the chief executive does”

The second is that the government, with a narrow and now no majority, has not been able to command sufficient support to make a deal, of any shape, pass through the House of Commons.

So if MPs want a deal, what’s the problem? They do – but they all want a different deal. I think I can best sum things up by describing MPs in retail terms as being part of branded fascia groupings, a bit like Nisa. Although they are elected and serve under a party banner, they also serve their customers, or constituents, and have their own ideas and will to survive.

Paths forward

Which brings me to the second issue. It is highly likely that the majority of people in your business think they can, in one way or another, improve on what the chief executive does. MPs certainly believe that of the government but, unlike most employees, they have a platform and votes to express their views. There are therefore many versions of a deal with the EU they prefer: Canada, Canada-plus, EEA, EFTA, a customs union… I could go on and on.

Add to this a government with a wafer-thin or no majority and you see why our political system and the potpourri of different ideas has made leaving the EU a challenge to deliver.

You also need to keep reminding yourself that politics is about power. It’s about being in office and governing. That means the loyal opposition will do whatever it can to undermine and wrestle power away from the governing party even at a time when a national consensus is needed. It was because of this that Theresa May attempted to increase the Conservative Commons majority from 13 when she called the 2017 election. To her dismay, the majority melted away and the task became even harder.

In my view, this all now leads to one of three outcomes:

1. MPs are shocked into agreeing to a deal put forward by the new prime minister.
2. There’s a general election that aims to secure a workable majority for a party or parties and route to a deal.
3. The country and Parliament remain gridlocked. 

What does all of this mean for retailers? It could mean so many things, but I have long maintained that although the uncertainty of Brexit will affect investment, consumer confidence and pricing and margins through a weaker pound, there are other fundamental issues impacting on retailing, and you know them well.

The changing needs of the millennial shopper. The huge extra capacity added by the internet to a mature volume of physical space. The significant capitalisation of digital pureplay retailers driving unprofitable models based on customer acquisition. The price transparency the web brings, which, along with the ability of discounters to secure confidence around their value, make it difficult for others to increase prices. And the upward-only costs of rent, rates and labour.

Under such circumstances and irrespective of the government’s approach to Brexit, the key to a successful future will be greater efficiency – achieved through more volume or lower costs or a combination of both – owning as much product IP as possible to have the best chance of controlling your margins and pricing, and having a differentiated service offer. It sounds familiar.