weekly feature | Mar 4, 2020 |
With the Brexit trade deal looming, brands look for opportunity

Late last year, before Brexit was a sure thing, Business of Home visited the showroom of a British company here in New York, and talk turned to the referendum. When asked how the the company was preparing to deal with the implications of England’s possible departure from the European Union, the founder thought for a moment before replying: “We’re trying to breathe a lot, and meditate.”

It was an understandable reaction. It’s been a chaotic time across the pond. Ever since the June 2016 vote to leave, Britons—especially those who do business overseas—have been stuck in a perpetual state of confusion over whether Brexit would actually happen, and if it did, what that would actually mean. Last year, Boris Johnson’s sudden ascendance answered at least one of those questions: Brexit is a go. What it means for the design trade is a little less uncertain.

By November, the U.K. has to agree on a new trade deal with the EU. Until then, British businesses—especially those that rely on trade with Europe—will be in something of a holding pattern. There are reasons to be optimistic. Over the last few years, the pound hasn’t yet plummeted below the dollar and the euro, a positive sign. However, some estimate that the eventual impact will result in a 3 percent decline in sales while costs for production will increase. For to-the-trade fabric companies, this could be a serious blow. Or—for the right brands—an opportunity.

Some of those brands might be American. The U.K. will need to renegotiate all of its international trade deals, not just those with the EU—and in the process, decide which of its industries to protect with tariffs. Some experts have suggested that the country’s own textile operations, for example, will not be deemed robust enough to warrant protection with tariffs. Such a move could pave the way for U.S. brands looking to gain an advantage with British designers. For now, it’s too soon to tell.

[There will be a greater] impetus on generating overseas sales, which leads to the ultimate irony—Brexit was caused by politicians who have zero commercial experience.
Luke Irwin

“With the unknown, it’s hard to know what your business will need,” says Bernie de Le Cuona, founder and CEO of de Le Cuona. “The only way to fortify yourself is to have a company based in Europe.” De Le Cuona believes her brand will have to move some of its operations to an EU member state and export its fabric from there—if the trade deal isn’t favorable to her business. “It really depends on what the tariff percentage is,” she says. There’s also uncertainty about what the U.K.’s relationship with the EU will look like over the coming years, or how the EU might be affected, including migrant labor and product regulation. In any event, de Le Cuona believes that the government will probably be likelier to help larger businesses, not smaller ones, which could make it all the more difficult for smaller, to-the-trade fabric companies.

In addition to businesses relocating to the EU, one of the trends de Le Cuona expects to see is more direct-to-consumer businesses. Claud Cecil Gurney, founder of the 30-year-old design house de Gournay, shares this sentiment. Online retail, he explains, has changed the paradigm, and the potential for luxury decoration houses to sell from their websites is huge. “If someone is in England and they do good marketing, I’m sure they can go on doing that,” says Gurney. “I don’t see why decorators and designers can’t sell all over the world.”

Gurney also maintains that design houses in the U.K. can find ways around the tariffs, advocating for them to sell from within Europe if they’re worried about losing customers. “Textiles don’t have to go through England if they don’t want to,” says Gurney. “Textiles aren’t made in England. The concept that they have to go through England is silly.” For de Gournay, Gurney doesn’t expect to see much change, and feels confident that with showrooms in seven cities around the world, any market downturn in Europe or the U.K. might be buoyed elsewhere.

Whatever happens, we’ll make a plan. We’ll make lemonade out of lemons.
Bernie de Le Cuona

Luke Irwin of the eponymous rug design company is quick to point out that looking elsewhere for customers is a funny idea if the U.K.’s politics is trending toward isolationism—or, in his words, xenophobia. “London is a very international city, probably the most cosmopolitan in the world, and this would be the basis of all luxury businesses in the city,” he says. International consumers of luxury goods have been leaving the city in droves, and that has impacted sales. “It leads to a greater impetus on generating overseas sales, which leads to the ultimate irony—Brexit was caused by politicians who have zero commercial experience, and who fanned the flames of anti-globalization. The upshot will be greater globalization as U.K. business seeks to find customers internationally.”

So, what can U.K. textile companies do? De Le Cuona thinks the advantage of small businesses is that they can be more flexible and nimble—traits that are often a challenge for larger companies. Adapting to the new circumstances might include catering to new markets, which she is keen to do: “We’re launching our new website that will allow direct-to-consumer sales from our flagship store,” she says. The company is also pursuing a wellness-minded client with the upcoming launch of a line of chemical-free fabrics.

De Le Cuona, Gurney and Irwin all advocated for those in their industry to open up, develop a robust online shopping platform and sell worldwide. “The world is a smaller place than it was in 1910—by my estimation, the perfect year for Brexiters—and hiding behind the White Cliffs of Dover does not rewind the clock by a century, nor does it offer any protection,” says Irwin.

Gurney advocates opening showrooms and expanding in the markets where to-the-trade companies have the most sales. “If they feel they lose some market [share] in Europe [because of Brexit], they need to bring [their product] straight to Europe,” he says.

For now, though, in absence of concrete trade deals, most can only go about business as usual. “Even if it’s not good news, that’s OK,” says de Le Cuona. “Whatever happens, we’ll make a plan. We’ll make lemonade out of lemons.”

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