The Future of the British Furniture Industry Post-Brexit
An overview of the UK furniture industry and how the future landscape could shift post-Brexit and as new demographics emerge.
Following on from Theresa May’s recent declaration that the UK had agreed to a withdrawal agreement with the European Union, there have been positive murmurings emerging from a range of different industries within the business community. While the agreement has not been positively received across the whole of the public and political spectra, there is the possibility that MPs will eventually push the agreement through parliament to avert an unprecedented political crisis developing in the UK.
While an agreement to work towards the current status-quo is something that is desired by many, this is particularly the case within the British furniture industry, which in comparison to its size and contribution to the economy, does not receive the recognition and representation within the media that it deserves.
This is exemplified by government statistics that were released in 2016 in relation to the industry’s 8,400 businesses, with a more than substantial £11.3 billion being contributed to the UK’s GDP in 2016 and over 250,000 jobs being dependent on the industry, both directly and indirectly.
When analysing the industry, it becomes evident that sadly it not does enjoy the same representation as other similar-sized industries within the UK. It also contains a higher number of small to medium-sized businesses in comparison to industries of a similar size. Therefore, it is more receptive to external factors, and a loss of frictionless-free-trade with the EU would have an incredibly detrimental effect upon the industry.
What challenges does Brexit pose for the furniture industry?
The loss of frictionless trade and placing tariffs upon imports and exports would have a severe impact upon the industry, which is very much reliant on supply chains within the European Union. This would inevitably lead to multiple challenges being presented to the small businesses within the industry.
There is also the possibility of trade being disrupted with countries outside of the European Union that Britain currently enjoys access to through trade deals that the EU has with these countries. This is especially the case if the country is forced to revert to WTO tariffs in the event that a deal is not agreed between the UK and the European Union. It will be imperative that the UK is able to replicate these deals in the long-term, however, this may well be a challenge due to these countries wishing to gain favourable terms for themselves.
Are there positive signs ahead?
There are, however, reasons to be positive for the industry, especially if businesses are able to adapt to the changing trends that will inevitably develop. In more recent times, businesses that have been receptive to investing in order to engage with Millennials and Generation Z, both of which now have increased buying power, have reaped the rewards.
These generations are much more likely to have increased confidence in purchasing furniture online, therefore businesses that invest their efforts in increasing their online presence and ease of usability are likely to reap the rewards. Those businesses that fail to keep up-to-date with regards to this shift in buying habits are likely to find themselves facing a volatile future.
While the online shopping sphere is dominated by large corporations for a large number of industries, there are others - like the furniture industry - that is dominated by small businesses.
There are certainly avenues of opportunity for those which are able to maintain a swift and seamless supply chain during the Brexit transition period, and once Britain is completely out of the European Union.
The aforementioned audiences, Millennials and Generation Z, have come to expect rapid delivery time, and in the capital, it is now common for companies to offer same-day-delivery options. Those companies which are able to invest in their own teams of courier drivers that can deliver within their local area without any issues are likely to gain traction and generate substantial increases in revenue over the upcoming decade.
Markets Outside of the UK
The ‘Made in Britain’ brand has become increasingly elevated in status in the world over the previous decade and it has now become synonymous with quality, both within Europe and the rest of the World. This is especially the case with the furniture industry where the quality of British furniture has become increasing sought-after by a range of markets, including both established and emerging ones.
This is due to the high-levels of skills and craftsmanship and the materials utilised, ranging from the quality of the wood and fittings, through to the high-end glue and spray contact adhesive employed to ensure that the furniture will provide the buyer with a product that will last for decades.
While it is imperative that the UK secures a free trade deal with the EU to protect the Furniture industry due to the size of the majority of the businesses, there are an abundance of opportunities for businesses that are able to take advantage of the shift in consumer demographics.
This will include investing in sustainable and cost-effective supply chains that ensure delivery times are cut to a minimum and are consistently met. In addition to this, there are also the emerging markets that may well become viable to sell in once Britain signs trade deals with these countries. Again, this will mean that a company’s online offerings must cover these markets, and that supply chains are smooth and efficient, but also cost-effective in order to compete with large companies.