Brexit and the U.S. Fashion Industry

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Based on the readings and our class discussions, please feel free to share your views on the following questions:

  • Is “Brexit” a big deal for U.S. fashion companies? Why or why not?
  • Does “Brexit” create any particular winners or losers? If so, who are they?
  • Any observed impact of “Brexit”?
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Author: Sheng Lu

Professor @ University of Delaware

54 thoughts on “Brexit and the U.S. Fashion Industry”

  1. One of the clear losers of the brexit deal are Sri Lanka, one of the already observed impacts of Brexit is that the value of British currency has decreased significantly

    1. such a large portion of Sri Lanka’s exports are dependent on Britian that the decrease in it’s currency’s value could seriously harm Sri Lanka’s economy. Presisdent Obama said that he thought it could take up to a decade to re-establish a free trade deal with Britain, which would hurt not only the fashion industry in the US, but also possibly put a dent in the economy

      1. Good point about Sri Lanka. Why do you think the currency value will affect Sri Lanka’s economy? Can you explain the mechanism in more detail using your own words?

    2. I think Sri Lanka will face economic difficulties in the upcoming years due to the fact that they have lost a major trading partner. I think they will pressure other countries (such as the United States) to purchase more of their goods so that they can sustain current levels of exports.

  2. Is “Brexit” a big deal for U.S. fashion companies? Why or why not?

    answer: in my opinion it isnt a big deal because most of our mass-produced clothing is made in taiwan and china.

    Does “Brexit” create any particular winners or losers? If so, who are they?

    answer: it creates many losers because the euro will not be as strong as it once was. Mind you the euro has been declining rapidly in the past few years.

    Any observed impact of “Brexit”?

    answer: there havent been any observed impacts yet because it is fairly new but i guarantee that in the next few years there will be detrimental impacts.

  3. I thought it was really interesting how the decision of one country had so much impact on the rest of the world because of globalization. I could see a connection between this article and the videos we watched in class because so many goods and materials from one country end up traveling to another so every countries economies dramatically affect the others.

    1. One example with how countries are effecting each other would be the risk Britain quitting the EU poses for the U.S. This would mean that they would have to wait as long as a decade for a free trade deal with us. Similar deals with middle-income countries that Britain sells nothing to in Africa and the Pacific and Caribbean might also have an incentive for better human rights to offer universal duty-free access to countries like this. This is because trade deals inherited from the EU will be eliminated so that Britain can start ones that they could actually benefit from in the future.

      1. good point! the uncertainty of “rules of the game” has a huge impact on US companies too. This both includes US textile and apparel companies that export to and import from UK. Plus, many US companies use UK as a gateway to get access to the EU market.

      1. Is it really correct that the UK serves as a gateway or hub to the EU ? I do not know many companies doing this. Even some may have their HQ in the UK physical flow of goods is very often different. It simply takes to long to reach the “continent” from the island.

  4. Brexit is a big deal because not only does it affect the EU and Britain but the whole global economy. New trade deals need to be negotiated, and will take time which will hinder global sourcing and trade in the near future. Stock prices also dropped drastically after the Brexit.
    In the long term Brexit creates a winner with Britain, because they get what they want and can be an independent nation. In the short run everyone is having problems negotiating new trade deals as well as dealing with trade difficulties that are happening right now.
    Brexit has a huge impact on the stock market, as there was a large drop in stocks the day after Brexit. These stocks represent the economy and the difficulties that are arising with Brexit and trade barriers.

    1. On top of the economy, it will be interesting to see how growth and development of third world countries might be slowed down or paused all together. With few products needed to be made if the demand for british goods shrink due to consumer uncertainty, then people will lose jobs and it will add to the poverty issues that are already being combatted

    2. Agree!! Just listened to a webinar provided by the US commerce department on the potential impact of Brexit on US businesses. The business community has expressed grave concerns about the future of UK-EU and UK-US trade agreement. The case of Brexit once again illustrates: 1) how interdependent we are; 2) the close connection between global business (such as sourcing and trade) and rules of the game (trade policy)

  5. I think that in the short run Britain would be considered a winner. With Brexit, there has been increased travel to Britain (more people are attracted to Britain due to the fact that goods are cheaper to foreign buyers). This may have a positive impact on their economy in the short run but those countries such as Bangladesh and Sri Lanka that rely heavily on Britain, would be considered the losers. These countries rely on exporting goods to Great Britain. Therefore these countries could face unemployment due to decreased consumer spending. Brexit created a lot of uncertainty in Britain causing financial market volatility which in turn caused consumers to decrease spending. Therefore less people are willing to spend money on goods which can have a domino effect to the rest of the world. Britain is the largest customer for exports after China and a failing market will cause job losses and unemployment. Countries who previously relied on Britain for consumption of their products no longer have this certainty anymore and therefore they are the real victims of Brexit.

  6. “Brexit” has definitely impacted U.S. Fashion Industries as well as industries all over the world. The fashion industry itself has faced some difficulties in terms of sales dropping. When “Brexit” happened, consumers were left with a feeling of financial uncertainty and thus became even more hesitant to buy clothing. This caused stocks in the fashion industry to drop lower than they were already. “Brexit” definitely has created winners and losers. In the article, it mentions how third world countries are effected the worst by Brexit due to timing and cost of creating new trade agreements. The winners of “Brexit” would be travelers to the UK who can spend less money on items due to the decrease in cost of the pound.

    1. Would you say one of the winners would be China because they can now travel to Britain to get the luxury goods they typically get when traveling to Japan but now for an even lower price?

      1. a very good question! Personally, I don’t think China is excited about “Brexit”, for two reasons: 1) UK is often used as a gateway to get access to the EU market. The future of UK-EU trade deal has created a lot of uncertainties for the business community. 2) The depreciation of British Pound to Chinese yuan will make “made in China” products relatively more expensive in the UK market–this will negatively affect China’s exports to UK

  7. Brexit is a big deal for U.S. fashion companies because it has the potential to cause financial market volatility and scare consumers into not spending. This would result in a decline in profit for U.S. fashion companies which would in turn lead to cut backs on both employment and production. Impacts of Brexit have already been observed such as declines in the stock market. American companies such as Abercrombie and Fitch, DSW, Francesca’s, and more have been placed on the watch list as the Dow Jones Industrial Average notes that the U.S. market performance is down by 3.39%.

  8. The article specifically mentions countries such as Sri Lanka which “rightly fears” the resign of Brexit. Another country that would be hit hard by Brexit is Bangladesh, “…where nearly half of the country’s entire manufacturing workforce depends on apparel exports to Europe.” After reading the article I believe that poorer countries will be the ones who will be most impacted by this change. Japan is another country that could be hit hard by Brexit. Typically, Chinese consumers travel abroad to Japan to purchase luxury goods but with the plunging currency Chinese consumers are now looking to travel to the UK. Therefore, Britain can gain at the expense of other countries such as Japan, Sri Lanka, and Bangladesh.

  9. US fashion companies that sell their merchandise to the UK could face challenges with the UK in terms of trading. The UK leaving the EU would terminate their free trade agreement with the US, and a new trade deal with the US could take years to re-establish.
    Brexit allows consumers in the UK to get luxury goods for cheaper prices because of the decline of the pound. This is a win for consumers but a loss for the retailers and designers who are forced to sell their products at cheaper prices than normal.
    In all, Brexit creates problems for free global trade with the UK and other countries. The UK is an essential trading partner with many countries including the US and China, which are two of the biggest trading countries in the world.

    1. I agree with you that “Brexit” has been seen as a positive thing for traveling consumers of luxury goods considering the drop of the pound. I think it’s interesting that you mentioned the negative factor of countries having to re-establish trade deals with the UK. Do you think that China and the U.S. are the outside countries most affected by “Brexit”? Or do you think that they have the financial stability and resources to quicken the process of making a new trade agreement and thus are not as negatively affected?

  10. Brexit has a large effect on both poor and wealthy countries since Britain is a major importer and exporter. It would affect jobs all over the continent since Europe’s apparel market is going to continue getting weaker for the next couple of years. It will be extra damaging to countries who mainly export to Europe, such as Bangladesh.

  11. The biggest impact of Brexit is increased volatility in the market that is already volatile which probably means a decrease of consumer sentiment. This will directly impact luxury goods companies.

  12. I think “Brexit” can become a big deal for the US fashion industry because it is affecting the prices of the retail industry and making some retail stores lose money. Many US businesses invest in the UK and so it might affect the American stock market in a big way. It is causing an increase in imports and tariffs and trade. There are both winners and losers in this situation but I believe for the most part there are losers. The stock market is low and the pound has dropped significantly. The losers are also retailers and investors that have put so much money into there stores and businesses. Winners include the shoppers that are traveling to the UK to get luxury items at a low price. I think the observed impact that I have noticed is that the day the “Brexit” happened the stock market around the world became extremely low, and there is no telling if the UK has a recession that it can take down the US economy as well.

  13. One group who will really suffer is small countries like Bangladesh who produce a lot of clothing and depend on exports to Europe.

  14. I think that “Brexit” is definitely a big deal for fashion companies because they will now be facing tariffs and barriers of trade, other countries might stop wanting to trade and bring in their goods and services thus making the stocks go down. It was also mentioned in the reading that there would most likely be a financial toll in the retail sector. Due to the current financial situation of Brexit, the stocks in the fashion industry are beginning to drop.

  15. In my opinion, Brexit is definitely going to effect US fashion brands because the UK leaving the EU effects the economy as a whole. The UK now has to create new deals with other countries in order to sell their products. I don’t believe there are any particular winners or losers to Brexit because it is a new adjustment for everyone. Since Brexit is so new, I don’t think there is any observed impact yet.

  16. Brexit is a big deal for US fashion companies because there is constant trade with the UK and if the UK withdrawals for the EU it would break their trade agreement with the US. It could take many years for a new trade deal to come into place. Brexit allows consumers in the UK to get luxury items for much cheaper because of the pounds decrease in value. It effects everyone else around the world because retailers are now selling their products at a much lower price so they are losing money.

  17. Brexit is a big deal for the U.S. fashion companies because the export of apparel products are definitely suffering.
    EU academia is heavy affected as a looser with Brexit. The amount of foreign students coming in to their school will definitely decreases as well as research funding. The financial industry would ale be impacted negatively with Brexit because it will increase the regulatory complexity of their global businesses.
    Brexit impacts the trade openness, labor movement and globalization.

  18. Brexit is a big deal for the U.S. because it will be harder to reach British shoppers due to the no free trade when the UK left the EU. Now, it will take longer to figure out trade laws with countries, even the United States. Also, I read online that of the top 500 retailers in North America, about half ship to the UK, and now this will be harder and more costly for everyone involved. Lastly, poor countries like Kenya and Bangladesh will be affected because they cannot afford to pay for trade and this could cause them to lose millions when importing/exporting.

    1. You make good long term points but there are some benefits in the short term. The fall in the pound is good news for retailers that have a large tourist pull. For example Burberry will benefit because of their cost cutting in May. However, in the long term consumers may pause before spending, along with companies pausing before committing to capital investments.

  19. After reading more about “Brexit” I came across an interesting aspect that I hadn’t yet thought about. I found that Brexit affects travel and immigration because there will be new barriers in the coming years. People that worked in London fashion houses that are from Italy or other European countries would now have to get visas and they are unsure of the cost. This will definitely impact the fashion industry because it will effect people coming into Great Britain for business trips and depending on the agreements made, might make travel more difficult. It will be interesting to see how it affects future London fashion weeks.

    1. I hadn’t thought about how Brexit would affect high fashion. I wonder if many designers who are foreign to Britain and show at London Fashion Week really live and work there, or if they design create their clothing elsewhere and simply show in London.

  20. It’s a big deal for the United States because it can effect trade amongst the countries. Although it didn’t work with Sri Lanka, it is not to say that it will not work with the U.S. The article mentioned how Brexit is more likely to pair with India than the EU. It would not be easy for Brexit to get free trade with the U.S. (apprx. ten years) which can have a high impact on fashion companies whose businesses are associated with Britian. Whether it is the decrease in consumption or loss of jobs, any economic change overseas such as this can have a huge impact on U.S. companies.

  21. The article states that some of the world’s poorest countries may end up the real victims of Brexit. This is important because Brexit doesn’t only affect European countries; it is a global event that affects many countries, especially those whose customers are European countries, like Britain’s large impact on China. I wonder how this event will change the economies of both the “customers” and the “suppliers”, and if there’s a way to rebuild this system of trade between both.

  22. I believe that Brexit will eventually be a big deal for the US fashion companies because it will reduce sales in the US. We have already seen that one impact from Brexit is the fact that British currency has diminished.

  23. The Brexit could pose a detriment to U.S. fashion companies since the U.K. is a key player in global trading markets, and U.K. citizens spend less when they are uncertain about the future. American companies like A&F, Michael Kors, Nike, Urban Outfitters, and VF Corp are among the stocks with the greatest direct exposure to the U.K. and have already seen drop offs in stock values, which is one already observed impact of the Brexit. The Brexit certainly creates both winners and losers — the winners being the Chinese, who are traveling to the UK to take advantage of decreasing prices in luxury goods. Another reason why the Chinese are winning is that the cost of travel to the UK has decreased and, as a result, many Chinese are planning trips. The so-called losers of the Brexit are the Japanese, whose popular shopping district in Tokyo will be less frequently visited by the Chinese, since the Chinese are now spending their money on U.K. goods. Citizens of the U.K. will also see a spike in the price of goods that were part of trade with E.U. member countries, since the cost of duties increases. Other member countries of the E.U. will also spend more on goods from the U.K. for the same reason. Above all, the chain impact of the Brexit is sizable; the repercussions will be felt for decades to come, on a global scale.

  24. Brexit has a large impact on the fashion industry. In terms of trade many changes will need to be made, with Brexit leaving the EU their free trade agreement with the US will be terminated. Consumer spending will also be affected by Brexit because with financial instability consumers will be less likely to purchase fashion because it is not a necessity. Brexit creates both winners and losers. Britain itself will be a winner in the long run because they will be a separate nation, and consumers in Britain will be able to purchase luxury goods at a lower cost. The losers will be third world countries and all countries that export to Europe like Bangladesh.

  25. Because the apparel industry is such a complex international entity, “Brexit” has the ability to impact fashion companies worldwide. Brexit has brought on a significant amount of consumer doubt. The article notes, that “uncertainty abounds” in the North American apparel sector after this decision. Additionally, stocks such as A&F, PVH, Kors and Urban Outfitters have started to drop already. These stock drops will also greatly affect the US fashion industry in the months ahead.

    The UK luxury fashion companies are certainly enjoying the flood of tourists coming to snatch up items since the pound has decreased so much in value. This flood of tourists, however, will potentially hurt Tokyo’s fashionable Ginza shopping district. As previously noted, apparel company stocks are also taking a hard hit from this decision.

  26. I believe the the Brexit will have a major impact on the US fashion industry as well as all other fashion industries. Britain leaving the EU means their free trade agreements with the US and other nations will be terminated and it can take years to reestablish these agreements, meaning the US trade with British companies could be heavily taxed causing prices to rise possibly making those companies less appealing to consumers.

    1. Just a short remark: The US and the EU do not have a bilateral FTA now. And the realization of TTIP seems to be extremely uncertain.

  27. “Brexit” is a huge deal not only for U.S. fashion companies, but also for global industries. Most decisions and actions we do are affected by influences from nations across the globe. Our economy relies on exporting and importing goods and services between other countries for economic stimulation and productivity. Britain’s decision on leaving the E.U. brings a lot of uncertainty due to the fact that previous trade agreements between the country and the rest of Europe will no longer exist. Britain is the second largest customer behind China for the rest of the EU’s exports; Brexit would make it extremely difficult for Britain to trade with these countries and therefore hurt the health of the European economy (due to job losses and decreased sales).
    Brexit would change the U.S. fashion industry by altering global markets. One market relies on every other for stability and change; with decreased trade to- and from- Britain, their money values will decrease (as already mentioned by the article with Chinese consumers traveling abroad for the less-expensive items). Lower monetary value could have a global impact on surrounding nations and eventually reach our economy.
    Immediate winners are the Chinese consumers just mentioned above. The British currency plummeted, making the country a prime hot spot for foreign consumers. As great as this is, the UK will suffer immensely trying to sell the same products for much less money.

  28. Not only is “Brexit” a huge deal for U.S. fashion industries, but also the over all global market; like a pebble thrown into the ocean, it creates a ripple effect. As Britain leaves the EU, the pound will depreciate and taxes will increase. This is especially harms brands such as Burberry, Mulberry, and Jimmy Choo, where there fabrics are bought and garments are produced within Europe. https://www.businessoffashion.com/articles/news-analysis/britain-has-voted-to-exit-the-eu

    Due to the sky rocketing pound, this creates opportunity for Italian and French fashion brands, who have dominated over half of the global luxury market, to obtain more of the market share.

    Although the main focus of the discussion is of “Brexit” and its impact on U.S. fashion industries, an observation of Brexit alone shows the fear Britain shows for increasing immigration rates may include more crimes and terrorism.

  29. The repercussions of UK leaving the EU seems very over looked according to outside countries. While one of their major issues has been solved, it has turned into a catalyst for major global trade problems. Britain is UN’s largest importer, which makes this an extremely difficult situation for foreign countries who now have to re-negotiate trade agreements that have been in place since its founding. Fashion being one of the largest global markets will be extremely effected because of these new barriers to trade. Agreements can take years to be finalized while in the mean time, the value of the pound is decreasing very rapidly and any of their exports will extremely taxed, which will discourage other countries to import their products and as a result cause a lose in jobs to people in 3rd world countries who will no longer need to produce as much because of how little will be necessary to sell. It will be a long time before we see any, if any, benefits from this decision at all.

  30. “Brexit” is a big deal for the U.S. fashion companies. One reason is that U.S. would have to lose free trade deal with Britain in the period of time because Britain have to settle duties, tariffs and other barriers to trade. Not only for the U.S., countries which had free trade with Britain before “Brexit” would face the same problem as the United States. Moreover, apparel stocks including Nike, Urban Outfitters, and VF Corp are already reeling because of “Brexit”. However, purchasing luxury goods has become cheaper for foreign buyers who could be seemed winner due to “Brexit” especially Chinese and Middle Eastern tourists.

  31. Brexit has made a large impact on more than just the Euro and the Pound. Believe it or not it has left a large impact on the fashion industry- in practically every aspect: business, manufacturing, sales, etc.

    Brexit left a negative impact on the poorer countries, such as Sri Lanka, Bangladesh and India, who are major exporters of products. Britain is a major game player in the retail market, in terms of retail apparel sales, and workforce opportunities. However with a failing market, it is difficult for Britain to provide these opportunities.

    Britain relies on immigrants from poorer countries to complete low level jobs for export products. Since Britian is no longer apart of the EU the less developed countries will not be able to work for Britain until new laws have been made and it is legal for these countries to work for them.

    On a positive note, the Brexit sent many visitors to Britain. After the split from the EU the value of the euro and pound plummeted, and therefore made the conversion rate more favorable. In particular, it was noticed that there was an increase in the amount of Asians traveling to Britain. This was not a coincidence. The Asia people are known to be very brand oriented and are arguable a very materialistic people. Asians traveled to Britain to take advantage of the favorable currency conversion, and bought expensive products at a much lower price. With the fall in the value of the euro the prices for designer goods has went down with the conversion of money, and have sent people traveling for lesser costing designer goods– such as Burberry.

    Could this be good or bad for Britain’s GDP?

    1. Great comment! It seems to be a consensus that Brexit will have negative impacts on UK’s economy. According to IMF this month, “UK’s economy would eventually suffer from the shock EU referendum result and said expansion next year would be just 1.1% – lower than it expected in the immediate aftermath of the Brexit vote.”

  32. Brexit is a big deal for U.S. fashion companies because trading with the EU or even Britain will not be the same. There will be higher duties, shift of imports/exports globally, and job losses. Some poor countries that depended on what the EU had to offer may have to rethink where they import from.

  33. Brexit seriously impact fashion industry in UK. Britain is famous for civilian fashion brands like Topshop, River Island, Reiss and other local high street brands which will become the the biggest victims. They choose to put production lines into Asian countries that have cheap labor and rich resource, which will make the outsourcing more expensive because most factories only accept payments from US dollars. In addition, for the production of the brands in the EU countries, Brexit will make the UK in the EU countries enjoy less preferential policies, and supply costs will increase. However, I think Burberry is one of the few winners. In recent years, the brand has been committed to the production line back to the UK so that as the depreciation of GBP, the cost will reduce.

  34. It was reported by Fashionista and WWD that Lauren Santo Domingo, founder of online retailer Moda Operandi, commented that she is not worried about the effects of Brexit on the fashion industry. She said that their revenues have been increasing steadily throughout the year, and that she thinks that small companies can change quickly, but larger companies will be hurt more. We will see whether this turns out to be true in the coming months and years. British designer Emilia Wickstead said the brand will not be changing their prices yet. I thought it was interesting to see what smaller luxury brands think about this situation, and it seems they are not sure what to do yet, but are optimistic.

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