United Kingdom has been part of the European Union since 1993. EU is both a political and economic agreement between 28 European countries. The idea came after WWII, that when countries are trading with each other, then it is highly likely that war will be avoided. Since then, it has evolved to a single market with free trade and it is as if acting as one country.
But this all changed in June 2017, when UK voted 52% yes at the referendum to leave the European Union until 2019. Thus, creating the expression BREXIT that stands for Britain joined with exit. Since the result of the referendum, the country is facing a big drop on the sterling value. However, consumerism had its positive impact. According to The Guardian (2016:online) ‘the sales in retail has grown by 1.4% (July) after a 0.9% drop in June.’
Figure 2.0 Pounds versus Euro
This boost in retail is also linked with the increase of tourism in the country, especially from China, Hong Kong and USA; with the low price of the sterling, their spending power has increased. Rise in tourism is not only important for the country’s economy but also for the luxury industry.
London has been one of the main capitals and financial power on the market. “The British luxury sector contributes £32m to the UK economy, accounting for 2.2% of the country’s GDP. Of that, 78% of production is destined for export, worth around £35.5m”(WGSN - https://www.wgsn.com/blogs/brand-britain-how-brexit-may-affect-the-british-fashion-industry/).
However, in terms of production, BREXIT can be a problem for fashion companies because the brands rely on imported goods and manufactu...
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...st, luxury market catered to mature demographic who had unlimited credit limits but it has shifted, since then, to younger consumers that are becoming more active. Now, Generation X and the ‘Millenial’ have more presence and are more than willing to spend more money on luxury items. According to Business Insider UK (2016:online) ‘Millennials, the 18-34 age demographic, are one of the most powerful consumer groups on the market.’
Digital marketing has been integrated in the marketing strategy of almost all of the luxury brands and this has catapulted the interest of the younger audience. They have managed to attract these new breed of consumers through social media and mobile applications. It is no more the competition on how the stores are going to be fabulous to attract buyers but the power of information technology has become critical, if not, paramount.
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