Expect an adverse impact on the already struggling British luxury industry post-Brexit, a luxury market analyst has said.
Covid-19 has already crippled the luxury industry in Britain. Eminent international luxury market analyst and founding managing director of the Maison India — Gaurav Bhatia has said that Brexit is going to slow down the recovery of the devastated industry in Britain. However, he also said that Britain might witness unprecedented growth in luxury from 2022 to 2025.
As Britain, specifically London, remains to be a major attraction amongst international travelers, continued restrictions on international travel have hindered luxury spending. As per the data available, almost 25 percent of the total revenue of the luxury market comes through consumer’s spending outside their home nations.
“The pandemic has already shaken the luxury industry everywhere. Cities like London have witnessed a halt in the luxury spending due to restrictions on travel with an impact on major spenders from Middle East and Asia,” says Gaurav Bhatia Sotheby’s Ex MD .
On Brexit, he says, “Trade on luxury goods between Britain and the UK are based on zero-quota and zero-tariff which is welcomed by the whole fraternity. However, there are uncertainties over many things such as the removal of VAT for the tourists which helps them get a tax refund. Also, Britain’s luxury industry is relatively smaller than the US and China. Now, when travelers can claim tax returns on products bought in other cities of Europe, why would they prefer British brands over its peers?”
However, Gaurav Bhatia also said that with the Brexit “now it is time to see how Britain will negotiate its trade terms with other countries. Talks on FTA between Britain and the US are something that can have a major impact on the industry. This can be an opportunity for Britain and several others to exploit the vacuum created by the Brexit in the British market.”
He also indicated towards a strong export base in the international luxury market that Britain is blessed with.
“Almost 80 percent of the luxury product produced in Britain is exported worldwide, which continues to be the stronghold of the country in international trade despite a steep decline in the global sales due to the pandemic. Now when Britain can negotiate its trade terms, luxury exports might get mightier.”
Moreover, he also spoke about an end of free movement of people between Britain and Europe effective from 1st January 2021. “More than 90 percent of the talented workforce in Britain’s luxury industry are EU nationals. If the paperwork is not done properly and rapidly, this might create a considerable impact on the industry. Remaining cautious over the new rules and regulations is recommended.”
Having served as the marketing director of LVMH India, and managing director of Sotheby’s India, Gaurav Bhatia is a Mumbai based global leader in luxury and lifestyle.