British Beauty Council CEO, Millie Kendall MBE is a successful beauty innovator, who has also brought many new international beauty brands to the UK over the past 30 plus years. In this article, Millie weighs in on her thoughts on the issues which the sector is already facing due to Brexit.
She also asks content creator Jane Cunningham, British Beauty Blogger, for some of her thoughts.
What is Brexit doing to the beauty sector? There is no doubt that Brexit has caused havoc already with exports of British personal care products incurring additional cost to both the brand and the consumer. When we started the council we intended to focus on the impact that this would have on our industry and to ensure that we were firmly visible on this topic as a sector.
There is significant cost associated with being EU ready, in some cases we have been told it is costing between £20-£30k per brand. When paired with the amount of time required to complete this process to get certified and ready, and the many teething problems with customs paperwork and payments that have been experienced this has been a considerable drain on many of our British SME brands.
The requirement for both an EU & UK responsible person for regulatory requirements not only duplicates the efforts and increases costs, it creates an industry to just collect paperwork. Brands feel that an agreement to mutually recognise the Responsible Person could have been reached.
The complexity of the new peel and read stickers on a product to accommodate the additional text needed for the ‘Responsible person’ details adds significant ongoing costs and time per item.
There is a distinct lack of clarity about requirements for languages in different countries. If these rules were strictly enforced many brands would choose not to sell into EU because of cost of multiple packaging.
Furthermore the feedback we are getting is that due to the complete lack of clarity with the rules, and only being agreed a few days before the end of the Transition Period, there should have been an extension to the transition period, or a period of waiving requirements.
The challenges with Import & Export – what some of our colleagues have to say
Exporting to the EU poses significant costs including duties, shipping and transport, VAT and customs. There have been extensive delays in exports to the EU, despite having the correct paperwork. The increased shipping costs and hurdles with the transport of goods across EU borders is proving challenging. Some brands have reported that logistics costs for raw materials and products have doubled. Haulage costs have increased from £2.5k to £4.5k. Both courier and delivery costs to consumers have doubled, with alternatives costing up to 3 times that pre-Brexit.
The costs of administration and reduction in efficiencies for delivery firms has meant a doubling of the cost of shipping to the EU. For example, the delivery cost of a product that is sold through an ecommerce platform might be £29.00 per item, in many cases the item sold will have a similar average order value, therefore doubling the price. This is not a viable price option for consumers, or for businesses to continue to grow exporting to Europe. Making EU exports untenable.
VAT and customs processes appear to be in an exploratory phase, and we hope process becomes more cohesive and cost effective, but some parcels find themselves stuck in customs for 2 weeks. There is confusion with regard to customers still having to pay VAT before their parcel is release. Customers in the EU who are used to packages just arriving are now having to pay VAT plus admin charges via their postal courier.
Imports from the EU are reported to be considerably more expensive with higher customs costs, increased costs of raw materials and delivery times extended. Extensive delays to imports from the EU have been notably due to the suppliers not understanding what paperwork to provide and items being delayed at customs. Importing international brands for retailers and PR agencies has been hugely challenging due to these delays, many said that they are struggling to get goods in which is leading to many brands ceasing trading with the EU and many suppliers who have said that they are no longer able to supply to UK, with no rationale or explanation in many instances.
Support for SME’s & our Expert Talent
It is vital for us as a sector, that is 95% SME, that there is support readily available to these brands in a way that it can be interpreted more easily. SME’s often don’t have a specialist team to facilitate them through this process and the many challenges it brings, many simply cannot afford ongoing specialist consulting costs and find the information available to them unclear. There needs to be more readily available information and support regarding regulatory matters, including labelling.
In fact when talking to British hair and make-up session artists who operate on a global scale they are unsure if they require visas or temporary work permits, or if they require the Sipsi & A1 documents. All artists travelling to Europe now have to do a carnet document to travel which lists everything in their kit bags, including serial numbers for all electricals & each product, lipsticks, Kirby grips etc. Understandably there are frustrations as there appears to them to be no specific dedicated government support team here in the UK that they can contact to clarify some of the above challenges.
Labour Market Impact
Although Brexit does not eliminate migration to the UK, finding workers from abroad for diverse and specialist skilled positions in the personal care sector has been made more difficult and restricted the labour pool. The Migration Advisory Committee worked on a shortage occupations list for the Home Office but did not consult with the British Beauty Council as industry stakeholders resulting in ‘hairdressing and beauty’ not being recommended for inclusion on the shortage occupations list. This severely impacts recruitment to the sector and will result in skills gaps.
We asked Jane Cunningham, British Beauty Blogger to comment on the issue we face with regard to Brexit and as a content creator her views on the channel of fresh new products and brands:
“We’ve already seen the impact of being remotely different or more difficult to comply with – certain sites (mainly USA and notably, Sephora) – simply divert us away from US sites to EU sites which means we can’t even look and see what their inventory is. I used to use Sephora.com as a reference site for new brands and trends – let me tell you, Sephora.fr just isn’t the same! Brexit brings more challenges for international brands who want to enter the UK market – or even supply the UK market, because that’s not without issues, either. I can very easily see that brands like UZ will approach mainland Europe before they try and tackle the UK. Or, worse still, decide they can do without us entirely. I feel our beauty landscape will be the worse for less choice from international brands – we’re at peak skin and hair care discovery and make-up will bounce back sooner rather than later. Our fascination and appetite with international brands, particularly Japanese and Korean, has never been stronger so it’s disappointing to think that beaurocracy will get in the way of discovery. I featured a Japanese brand recently (UZ) that got a strong response from britishbeautyblogger.com readers but it has no immediate plans to enter the UK (but is available to the US) and while it is available on international sites such as YesStyle, you will pay £27 for a $16 eyeliner. There have been problems at customs with YesStyle post Brexit with charges added to international packages, although the site will refund customs charges if you have all the paperwork.”
– Jane Cunningham, British Beauty Blogger