A hard Brexit would hurt distribution

Distribution could be one of the biggest victims of a hard Brexit with the consequences of crashing out of Europe potentially being severe for those trying to move products around the continent.

Speaking at the Canalys Channels Forum event, Steve Brazier, president and CEO of the analyst firm, outlined three possible Brexit scenarios, ranging from staying in, a soft exit or the hard option favoured by the likes of Jacob Rees-Mogg.

He felt that the first two options would see the pound recover and spark a mini-boom that would be good for the tech industry.

The third option of a hard Brexit would be disastrous with the pound crashing and a recession being kicked off that would hit the channel.

“If Britain strongly leaves the European Union and goes to a Canada plus model or a World Trade Organisation model, in which case the pound will crash, tech prices will rise and there will be a severe recession. For the tech industry it will mean you can’t have European wide products,” he said.

Brazier warned that the consequences for distribution could be significant because the majority were pan-European and controlling stocks that have until now flowed across open borders.

“The distributors will have to UK warehousing for all goods and won’t be able to swap between countries which means there will be delays in imports, which means there will be product shortages. But there will also be product oversupply because it won’t be so easy to ship over supplied products to other countries,” he added.

Even those distribution players that operated solely in the UK would be hit because of the recession that he expected would be sparked by a hard Brexit.

The channel has been largely silent on Brexit, with many preferring to avoid talking about politics, and Brazier agreed that it was a complex situation because staff in vendor and channel organisations were not united on the issue.

But he was prepared to share his own views and made it clear that he felt that the European Union had played an important role since its foundation.

“Apart from economics, which is important, the founding of the European Union was essentially to make sure that Europe never went to war again. Whatever people think about some of the issues I think the priority is that we never go to war again. So I think it would be a huge disaster,” he added that the world could change for the worst geo-politically.

The question of Brexit has largely been absent in discussions with vendors at Canalys Channels Forum but a few have been prepared to talk about their plans.

Sarah Shields, vice president of enterprise channel Europe at Dell Technologies, said that it had been working on plans for Brexit since the referendum result and would be ready to react.

“We have had a team working on Brexit,” she added “We have been working closely with the UK government and various advisory boards about what the outcome will be.”

Fiona O’Brien, chief channel officer EMEA at Lenovo, said that the vendor operated in 160 markets and had a team that monitored regulatory change and it would integrate whatever Brexit outcome emerged into its supply chain.

“We are as a company committed to open trade and we want markets to succeed and to ciontie to be buoyant and any barriers to trade to be removed,” said   “Any impact to open trade would be a concern.”