While the dust was settling on the startling vote that the British people cast against remaining in the European Union on June 24, several decision-makers in the eyewear sector responded to our invitation to outline the effects that it may have on their businesses.
In general, they indicated that Brexit will have no immediate, tangible effects in the eyewear sector. The British people will still buy glasses to improve their vision, but perhaps cheaper ones and fewer sunglasses for sunny summers in Spain or Italy, which will become more expensive for them because of the lower value of the British pound. In the medium term, the effects of Brexit may well be by and large negative, with some exceptions, but dependent on future action on the regulatory front.
The president of an international eyewear manufacturer that has its European hub in the U.K. said that Brexit will likely accelerate his company's plans to expand operations from the U.K. to France, Switzerland and other parts of Europe. Another international manager said that Britain's pullout from the EU may have legal and fiscal consequences for his company's operations in the country, which are not clear yet.
For most companies that import eyewear into the U.K., the biggest and most immediate issue is the currency, which can only be hedged in the short term. With the British pound down to a 35-year low, the result will be generally inflationary, as the higher cost of importing merchandise will have to be passed on.
That goes for all kinds of products for which the U.K. is a net importer, and there are lots of them in our sector, including most prescription frames and sunglasses. Designer frames made in Europe will be affected the most. Opticians will have to charge more for them, but British companies that make their glasses in the U.K. like Optoplast Actman may draw some benefits from the currency situation, if it persists. CooperVision, which has a huge manufacturing facility in the U.K., will probably benefit, too.
Ophthalmic lenses would be largely spared from the inflationary trends. Noting that the U.K. has more independent RX laboratories than any other European country, Mark Mackenzie, the expert behind the Strategy With Vision consultancy, felt that Brexit may on the other hand break a tendency to spread lens processing capacities among different labs across the EU.
He also said that Brexit will help preserve the entrenched status of the optometrist and the dispensing optician in Britain. There is hope that, on the regulatory front, the U.K. will agree on common guidelines with the rest of Europe on controversial issues like cross-border online retailing, where British companies play an important role.
Pointing out that its online shop in the U.K. has been doing well and growing fast, Mister Spex from Germany said it continues to believe in a European vision, the attractiveness of the U.K. market and its own ability to deliver a “great shopping experience” to its customers. Because of the drop in the value of the pound, Mister Spex raised its prices slightly after the Brexit vote and will continue to review them regularly.
Anyhow, observers agree that there will be a long period of uncertainty that will slow down economic growth in the U.K., with some consequences for the rest of Europe. The uncertainty will probably last for at least 24 months as the U.K. will have two years to negotiate the terms of its divorce from the EU, once its future new government notifies the European Council.
In the interim, a lot of plans and decisions will be postponed, which is not good for business, said Giovanni Lo Faro of Modo, adding that the vote was probably dictated by the general feeling of independence that has pervaded the history of the British Isles, rather than by economic considerations.
Cultural factors and a proper lack of education and information about the advantages of the European market certainly played a strong role in the vote, along with a general discontent with politicians. Interestingly, there was a big spike in Google searches about “what is the EU” after the polls closed across the U.K. Many Britons used Google to find out how and where to emigrate.
The referendum itself was highly divisive as people who regarded themselves as friends found themselves suddenly at odds because of their differences of opinion on the subject. Expatriates living in the U.K. felt particularly bitter about this.
A very open-minded Frenchman who works for a large Italian optical group said that Brexit will probably tarnish the vibrant dynamic of London among foreigners and many British people as well. A former manager of the same group predicted that fewer British tourists will travel to the Continent.
Both of them expressed concern about a domino effect on the rest of Europe, with other countries and regions organizing a similar referendum or demanding a renegotiation of their status within the EU.
Bank and housing stocks were hit hardest by the Leave vote because of the impact that the vote will have on investments by businesses and consumers. Foreign banks were also affected because London remains an important international financial hub, and any crisis in the U.K. and its trade with the rest of the world will affect the rest of Europe and businesses all over the world.
Some supporters of the Remain option hope that the U.K. will elect in the end to join Norway and other countries as a member of the European Economic Area, which would still give them access to the single European market, with the ability to do business all over the EU, without participating in the political decisions made in Brussels. In this case, however, the U.K. would have to agree to put no restrictions on the movement of labor from the EU.