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A recent trading update from the Royal Mail gives us a very interesting insight into how small British businesses are faring with Brexit.
n the five months to August in 2019, the Royal Mail recorded 111m international parcels. (In total the UK postal service processed 520m parcels, but 409m of those were domestic mail.)
Parcels traffic was up last year as ecommerce enjoyed its peak lockdown moment. But this year Royal Mail’s international parcel business plummeted to 70m in that same five-month period.
It’s probably safe to assume that quite a few of these unsent parcels used to be the ones that were mailed to Ireland and other parts of the European Union. Some were no doubt packages from family members and friends – but SMEs depend heavily on the Royal Mail.
Rumours of postal disruptions among Irish customers have intensified in recent months, with plenty of anecdotes about customers facing customs charges or delays.
One of the main causes of this is the implementation of new EU rules, which means many items are now liable for VAT and customs charges (before July 1 goods under €22 were not affected by VAT).
Some of the EU rules – such as all goods coming into the bloc requiring 10-digit electronic codes – were originally aimed at cheaper items being imported from the likes of China. But the rules have had quite an unexpected impact, given Britain is now considered a third country.
And An Post is getting a real taste of post-Brexit complications.
When asked a number of questions about the Royal Mail’s trading update and what it means for post coming into Ireland, it becomes clear that An Post is labouring at the coalface.
“The world has become a lot more complicated due to new EU customs rules and Brexit. An Post is taking big steps to help customers find a way through these changes, most particularly with parcels posted from non-EU countries, including Britain,” said a spokeswoman.
“We are also in daily contact with the Irish Customs and are working closely with non-EU postal services, most particularly Royal Mail, to help them deal with the complex EU customs changes impacting their parcels into Ireland.
“We know how frustrating any disruption is to customers, so we are working to help alleviate the issues at source, that is, with those who are sending the goods from non-EU countries, and those who are carrying them – for example, Royal Mail.”
Over 95pc of all parcels enter Ireland and go straight out for delivery. Almost all of the larger non-EU retailers – including high-street British brands such as M&S, River Island, Boots, etc – have systems in place with An Post to provide a simple facility at the online checkout to pay all VAT and customs charges upfront.
These parcels can come straight through Customs for delivery with no delays.
Of parcels which are not prepaid, an increasing number have the required declarations in place to enable customs to raise whatever charge is due. An Post then advises the customer of the charge by text email or postcard that money must be paid. Then it is delivered.
A small proportion of items posted from non-EU countries (most particularly Britain, says An Post) don’t have any of the required electronic customs declaration attached, or else an incomplete declaration, and/or they contain goods which are now restricted or prohibited from entering the European Union.
“These cannot be processed by Customs, and An Post has no option but to have them returned to sender. The customer may have received notification that an item is in the country, but they wouldn’t be aware that the item arrived without the necessary customs declaration data, or that the contents are prohibited,” said the spokeswoman.
From what An Post is seeing, it appears that many smaller retailers (specialist stores in the UK, in particular) are not aware of these requirements, and have not put in place the necessary online shopping systems for selling to Ireland.
It may be hard to believe, but gift parcels being sent by family and friends in Great Britain (which excludes Northern Ireland) to Irish addresses are also bound by the new EU customs regulations.
It’s all putting pressure on An Post, which says it allocates resources to the areas of most need.
“Right now, it is our key focus. We have teams dealing daily with Customs, with the Royal Mail and other non-EU postal services, and also teams dealing with customer enquiries and information requests,” said the spokeswoman.
While this is a headache for our postal service, it does gives a worrying insight into what life is like for some businesses in Britain.
Ireland has long been a reliable customer for all sorts of businesses there. And SMEs are having great difficulty getting their goods over here.
A 41pc falloff in parcel packages is not being felt by the retail giants who have streamlined services and fall into a different category of parcels.
But the smaller guys – and their customers – are feeling the pinch.
Oodles of spending at Boodles post-lockdown
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Sophie Styles at Boodles in Grafton Street, Dublin. Picture by Mark Condren
Anecdotes that at least some lockdown savings are being splurged on jewellery seem to be true for one luxury jewellers. James Amos director of the British group Boodles has been back visiting the Grafton Street store he once managed — and says average expenditure by well-heeled clients is on the up.
Looking at numbers now versus pre-pandemic he said: “Profits are nicely up. Bearing in mind that the shop has been closed a lot longer [in Ireland] than in the UK, units for the year are up around 10pc. Our year starts on March the first — and sales are up about 20pc.”
Amos recalled that some couples spent millions of euro on jewellery during the boom years but that had tapered off. However, the last few months have been a revelation, he said.
Around five years ago, most sales would have been in the €5,000 to €10,000 range. “This year, we have seen quite a lot of individual sales which would have been much higher in value — sort of €50,000, €60,000, €80,000 level. Which we haven’t traditionally seen in Ireland.”
“We have a great team here with new manager Sophie Styles,” he said. “And we’re seeing a higher calibre of customer.
Amos has been over here to show off Boodles’ ‘Around the world in 16 days’ collection featuring some of the finest gems from around the world. He recently held a dinner for 20 special shoppers in Patrick Guilbaud and plans several more high-end gatherings
Abercrombie & Fitch sees turnover take hit here
A&F Hollister Ireland, an Irish subsidiary of US fashion and retail giant Abercrombie & Fitch, has reported a large drop in turnover in its results for its most recent financial period.
Turnover at the company, which operates stores under the Abercrombie & Fitch and Hollister brands in Ireland, was down to €3.2m in the period from February 2, 2020, to last January 30. It fell from over €7.5m in its previous results for 2019 to 2020.
The directors’ report said A&F had seen and expects to continue to see a “direct, material adverse impact to sales” due to Covid-19.
PMD places faith in Loretto
Cork-based digital medtech firm PMD Solutions has appointed an industry heavy hitter to chair its board of directors as it looks to bring its respiratory management product to healthcare systems worldwide.
Loretto Callaghan, former CEO and country president of Novartis in Ireland, will bring her experience to PMD as it continues to roll out its RespiraSense respiratory rate monitor, which has already been deployed as a primary tool in the care of Irish Covid patients.
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