Covid and Brexit could boost UK fashion manufacturing - report

By

Sandra Halliday

Published
Nov 23, 2020

While the pandemic continues to have a huge negative impact on the British economy, and Brexit is widely expected to do likewise (even if a deal is struck with the EU), both situations could have some positive effects with an increased focus on manufacturing in the UK, a new report claims. The biggest impact would be felt in the areas of food and fashion.

The report, from advisory firm Alvarez & Marsal and research specialist Retail Economics, covers a number of markets and its figures are in US dollars. It said that between $4.6 billion and $6.4 billion (£3.4bn-£4.8bn) of trade could be ‘on-shored’ in the next 12 months. The UK imported $36 billion worth of clothing and footwear last year and exported $11.9 billion worth, it added.

The report, said the pandemic has forced many retailers to look at their supply chains, but retailers in the UK were already doing so given the expected impact of Brexit. 

If no deal with the EU is forthcoming, 12% tariffs on clothing and 16% tariffs on footwear could be applied, which would be a major inducement to on-shore manufacturing.

And increasing consumer interest in sustainability has also been putting pressure on retailers to cut down on the distance that the clothes they sell have to travel before they get to the consumer.

Some 3,000 consumers were surveyed for the report and in the UK, 32% said they’d be prepared to pay more to buy from a retailer that manufactured in Britain in order to reduce emissions. Another 35% would favour such retailers if the products weren’t more expensive.

There were similar results seen in France and Spain in relation to companies manufacturing in those countries. But consumers in Germany and Switzerland were far more likely to be prepared to pay more for ‘green’ goods, while those in Italy were less likely to be interested in green efforts altogether.

Meanwhile, in a survey for the report conducted among 30 multinational retailers with a combined turnover of over €600 billion, it showed 55% have already started diversifying their suppliers, while 29% are thinking of doing so in the next 12 months. Additionally, 23% have moved manufacturing to countries closer to home, with another 46% looking at doing so. And 14% have brought manufacturing back to their home country, while 42% are looking at bringing production home in the next year.

That said, retailers do still see barriers to manufacturing in the UK, with 86% citing higher costs, 77% a lack of specialist manufacturers, and 67% a lack of choice.

The report said around 70% of the retailers surveyed “had already started changing the way they sourced goods to meet green or ethical targets”.