Northern Irish Shoppers Could Have Less Choice in No-Deal Brexit

J Sainsbury Plc warned that its shops in Northern Ireland might have to offer a significantly reduced range of products in January if no trade deal is reached with the European Union.

Chief Executive Officer Simon Roberts said that he was among industry leaders meeting with Michael Gove, a senior member of the U.K. cabinet, in October to stress the urgent need for clarity on the license and import requirements that will be necessary to move goods from the British mainland to Northern Ireland. He said it was especially important that the government provided certainty soon given that retailers are also having to cope with the pandemic lockdown and the Christmas shopping rush.

“If we don’t get greater clarity on the Northern Irish situation, then we will see a restriction on the ranges of products we can sell,” he said on a press call. “This is not one or two products in stores I am talking about -- it is a substantial number of products and quite key, everyday products too.”

Northern Ireland has been a thorny issue in Brexit negotiations for some time. From January, animal products transported there from the rest of Britain could require export health certificates. That, along with other customs declaration requirements, could significantly raise U.K. supermarkets’ cost of operating in the province.

The added paperwork is necessary because Northern Ireland will be bound by the EU’s customs rules after Dec. 31, meaning it will have to apply the bloc’s standards on animal health while the rest of the U.K. will not.

It is not only a problem for Sainsbury but also rivals Tesco Plc and Marks & Spencer Group Plc, because much of the stock in their Northern Irish stores comes from the rest of the U.K. With profit margins already narrow, the higher costs could prompt some retailers to turn their back on the region.

On Wednesday, M&S warned that its business in Ireland could be materially impacted if no deal is agreed with the EU and significant tariffs and bureaucratic costs are added to food imports. Retail prices for shoppers could also have to rise to reflect increasing costs.

Sainsbury and other grocers want the EU and U.K. to set up a “trusted traders” program to simplify the process. That would create a certified, auditable fast-track system for goods to flow into the province with the same ease they do now.

“Customers in Northern Ireland will expect to buy the same range of products in January as they do today and it is our job to provide that to them, which is why we need clarity,” said Roberts.

©2020 Bloomberg L.P.

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