Following the vote to leave the EU by the UK on June 24 there has been a period of uncertainty as everyone sits tight to see what impact the decision would have.
Now, this is not a political message but almost two months on, we are beginning to see some of the consequences foreseen by the ‘Remain’ camp coming to fruition.
There are warning signs that the economy is struggling, with The Bank of England attempting to address the situation this week by dropping interest rates to an all-time low 0.25%.
Now this is obviously a good move for homeowners paying off mortgages and for individual loans, but it does not address the problems for businesses, who will still pay the same rates to borrow.
In my opinion a drop in VAT would have been far better for businesses, and in particular retailers as it would have stimulated sales and reinvigorated consumer confidence.
However, more importantly for retailers it is the weakness of the pound that is the biggest cause for concern.
Since the Brexit result was declared sterling has been on somewhat of downward spiral, starting at 8% down on the dollar as the result came in. Since then its decline has continued at a rapid pace and has reached levels not seen since 1985.
With the pound so far down against both the dollar and the euro, there is no doubt that many brands will be discussing the timing of inevitable price increases.
High street giants Next have come out this week saying it will have to hike prices in the face of soaring costs due to the weakness of the pound, while car manufacturer Ford has also warned that it will have to increase prices to claw back loses incurred since the referendum.
Unfortunately the golf industry is not immune from this drop in the currency rate and the reality is that it’s highly likely brands will have to start putting their prices up by the end of the year.
Given all of this you would think that PGA Pros in Ireland would be safe from these market forces as they are still part of the EU. Sadly not, as most of the major brands are UK based, they buy in dollars bought by sterling, which is then converted to euros, so the same issues will apply.
What retailers cannot afford to do is bury their heads in the sand and hope everything returns to normal.
If wholesale prices go up then, unfortunately, retailers will have to do the same to ensure they continue to make a healthy living.
Once reality bites and suppliers begin to increase their prices then retailers will probably have to do the same and pass these costs on to the consumer, rather than risk trying to hold prices down unnecessarily.
This is going to be happening across the board, whether it’s for a loaf of bread or the latest driver, if the pound remains weak, prices are going to go up, that’s an economical fact of life.