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In focus: Sector reacts to prospect of no-deal Brexit

Business
The prospect of a ‘no-deal’ Brexit is causing an unwanted distraction for UK politicians and domestic businesses alike. Joe Ayling reports on concerns within the optical sector

As Brexit negotiations continue to stutter there have been resulting cabinet resignations, currency fluctuations and even talk of stockpiling food and drugs.

Essentially, with UK proposals to the EU falling short of the mark and the Prime Minister maintaining ‘no-deal is better than a bad deal’, the possibility of higher tariffs under WTO rules has been growing by the day.

And while the Brexit conversation is a turn off for most patients, high street practitioners and their suppliers cannot escape some of the possible repercussions of a no-deal.

Moaz Nanjuwany, optometrist and CEO of Hammonds Eye Practice Group, told Optician such a reality was likely to result in higher prices for the end patient. At the moment, he sources products for his Tottenham-based independent practice from suppliers in Europe.

He said: ‘We go to European trade shows including Mido and Silmo to find the latest designs, often placing orders with companies that have no distribution here in the UK. While we always want to encourage domestic suppliers here in the UK, we are looking for new elements of fashion and design from overseas.’

Aside from the financial impact, he pinpointed medical research as another area facing disruption.

‘More generally, the uncertainty of Brexit is affecting business in the UK. Not having a decision one way or another puts uncertainty into the market,’ Nanjuwany (pictured) added.

Peter Beaumont, CEO of Dunelm Optical, told Optician that while a rise in the value of the dollar against the pound would normally help exports, unrest around Brexit was making European countries more cautious dealing with UK-based firms.

He warned prices would go up as a result of higher tariffs and the weaker pound, adding that ‘independent opticians should stock up now’.

‘This is inevitably going to be the case across all industries, not just the optical industry. Commodities like oil are traded in US dollars and these will become more expensive too, and result in general price increases of all products,’ said Beaumont (pictured). ‘As I predicted before the referendum in Optician magazine, the pound has already dropped a minimum of 20%.’

Peter Smith, regional VP of Essilor UK and Ireland, stressed that the company had factories and labs based locally as well as importing products from both the EU and worldwide. If tariffs were applied, it would need to economically evaluate the proportion of products being imported and locally produced.

‘The first response is to reassure independents that Essilor, as their best business partner, will do everything we can to minimise disruption but it is entirely possible that factors out of our hands could influence how business is done today,’ Smith added. ‘Strong and agile businesses will find a way to cope, but change and uncertainty on this scale may be unprecedented. It is difficult to imagine any short term benefits.’

SightCare CEO John French said fluctuating optical products and equipment prices would be tricky to withstand for many independents.

He said: ‘If we have no deal then the prices independent opticians will have to pay for their frames, contact lenses and optical equipment will squeeze their already tight margins.

‘The eyewear and equipment suppliers who source from Europe would suddenly have massively high tariffs put on it, while those who produce optical products domestically would have tariffs on their exports and would lose customers in Europe, meaning they would put up prices in the domestic market to recover those extra costs.’

To prepare for such an eventuality, French (pictured) said forward-planning and financial knowledge was vital.

He added: ‘Independent practices have got to have the discipline to plan ahead and plan ahead about a year. You have to know your numbers. If you don’t know your numbers, you don’t understand your business, because you can’t project accurately. It’s about having that discipline every single week. Look at your numbers, look at your sales and understand how that is affecting your bottom line.

‘Also attracting and retaining talent is vital and in a post-EU-referendum world that’s as much about the independent business you are as what you sell. The one thing you can do to continue to attract talent is showcase your ethos.’

Asked whether there could be any benefit of a no-deal Brexit, he did highlight the potential relaxation of employment laws. ‘A lot of independent practice owners will welcome the potential reduction in the red tape involved in employing staff, and they will hope not having to follow EU legislation will bring greater flexibility to adjust their workforce in the future,’ French added.

A situation businesses hate

Further adding his personal opinion and not that of Essilor International, Peter Smith, regional VP of Essilor UK and Ireland, offered the following response to the prospect of a no-deal Brexit.

‘In general, the published responses from both the CBI and the House of Commons Foreign Affairs Select Committee sum up the general uncertainty businesses like ours are facing.

‘The CBI members understand “the top five consequences of no-deal are: rising costs for consumers and businesses, disruption at ports and airports, confusion over everything from contracts to chemicals regulation, uncertainty for four million citizens and cross border services in disarray”.

‘The Foreign Affairs Select Committee says “a no-deal would bring loss of rights, serious economic damage, confusion and uncertainty”. Also Donald Tusk, president of the European Council, said “A no deal scenario would be bad for everyone, but above all for the UK”.

‘It is a highly complex and uncertain situation which businesses hate. A lot would depend on the notice period, for example a last minute no-deal just before March 2019 would cause even more chaos than one with time to prepare.’

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