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The Brexit Column: Who’s your rival in a no deal fight?

Who are your new rivals if there’s no Brexit deal?

With warnings of a disorderly Brexit growing, companies need to understand who they are competing against in trying to minimise the fallout.

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Director, Public Policy

KPMG in the UK

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In a week when both the UK and EU stepped up the warnings about life under a ‘no deal’ Brexit, I’ve also detected a pick-up in the urgency of businesses to prepare for the same scenario. But are they doing the right things? In deciding what actions to take, our natural human inclination is a glance across at our neighbours – in this case competitors in your sector – who look like you, sound like you and who have most to gain if you muck it up next March. 

This is understandable: most businesses have always defined themselves by sector. However in understanding how a ‘no deal’ might hit us, we need to look beyond our sector and examine what commonalities unite us with businesses in completely different industries … and divide us from businesses in our own sector. You might be the baker, and they the candlestick maker, but in broad terms you can both be defined as ‘sellers to the middle-classes’, ‘users of third-party logistics providers on UK motorways’ and ‘employers of lower-wage staff’.

So from the perspective of planning for Brexit, if your dependencies are the same then so are your vulnerabilities. You will be chasing the same scarce inventory space, stuck on the same clogged motorways or competing for the same pool of low-skilled labour. A care home paying its cleaning staff close to minimum wage runs the risk of a mass defection if it’s benchmarking wages against others within its own sector. Why? Because higher competition for local staff may be the result of fewer EU migrants landing in the UK.  And that may mean that their workforce, which is relatively fungible, may be tempted away if a hotel or office block is recruiting cleaners for a wage of £2 an hour more.

Making new friends

The only way to avoid being blind-sided is to maintain as wide a view as possible. Consume the general business pages, not just your industry journal. Better still, identify a sector where you have a commonality and read their trade press. Build your personal network as broadly as possible and make sure your advisors are giving you that cross-sectoral view – I try to shoe-horn it into just about every Brexit client meeting I go to. If nothing else, it helps people realise they are not the only ones pondering an uncertain future, and that solutions exist in the strangest of places. 

Because as well as your ‘no deal’ competition, commonalities with businesses in other sectors can provide inspiration, solutions and new and powerful networks.

Imagine a high-end food retailer which might ordinarily think of itself in the same broad bracket as a supermarket, with its preoccupations around potential staffing shortages, tariffs, border delays etc.  Now imagine how that high-end food retailer starts to approach this issue if they regard themselves as an export business first and foremost. While the supermarket frets over a weak pound raising the prices of Spanish tomatoes and Italian pasta, the luxury retailer will focus on the fact that sterling depreciation should woo more tourists to its UK stores. This retailer might now ask itself what Brexit tricks it can learn from its new bedfellows: airlines, hotels or handbag makers. 

It seems that in preparing for Brexit we might need to be more imaginative in where to look for good ideas.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK. You can register for the email subscription list of this column and expert views from our Brexit leaders.

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