Read all about it: how do independent retailers view Brexit?

The Molotov cocktail exploded into the halal food shop. Flames spread fast and gutted the store in minutes. One worker scrambled out, bruised but alive. But owner Jamal Hussain was forced to watch his business burn to the ground.

Investigators said they would keep an “open mind”. But Birmingham locals were in “no doubt” that the “despicable” attack stemmed from the EU referendum five days earlier, with racist thugs using Brexit as an excuse to act on their prejudice. And the attack wasn’t a one-off.

A Romanian store owner in Norwich also had his store smashed up and set alight by “racist vandals” in the days following the controversial vote, while Polish shopkeepers in Plymouth said they were “scared” to speak their own language for fear of reprisals.

With more stories of racist abuse circulating the convenience sector, the ACS released a public statement on the “unacceptable” level of “xenophobia” aimed at some of the 50% of c-stores run by British Asians.

“Sadly some people, and in reality it is probably a very small minority, feel through some warped logic that the referendum result has given them the permission to express these views, in some cases aggressively and even alongside violence,” said CEO James Lowman. The body was already in close contact with the Home Office, he warned, to ensure action was taken.

Fortunately, though police say incidents of racist abuse spiked by 42% in the days before and after the EU referendum, it was as quick to decline as the dust settled. But there are other potential dramas on the horizon and as store owners turn their gaze to the medium and longer-term implications of Brexit on their shoppers, their prices, and their workers, they remain split 50:50 on whether or not convenience should welcome life outside the EU, according to our barometer.

The first immediate post-Brexit related issue c-stores are likely to come across is an increasingly cautious and budget-conscious customer, according to research from Harris Interactive. It says 22% of consumers plan to budget what they spend on groceries more carefully in the wake of Brexit, with 13% on the lookout for cheaper alternatives.

Grabbing business from the mults

Convenience stores will always be more expensive than supermarkets, so the research from Harris Interactive doesn’t immediately look like good news for c-stores. But this caution could also present an opportunity to grab business from the major multiples.

“In times of uncertainty we have noticed that people shop little and often,” says owner of James Convenience Retail Jonathan James, which now operates 110 c-stores across the UK after acquiring 77 Rippleglen stores in March this year. “People are very focused on wastage and they don’t want to tie up their money in a big shop. We’re hoping that will be the case again, with people coming into our stores to shop on a more regular basis.”

With many of his stores trading under the banner of Select Convenience, James is “confident” value offers such as his will position his stores in a “very good place to the be the destination of choice”.

Small retailers might also find Brexit offers up an opportunity to champion local produce at a lower price than they used to be able to. With sterling still weak (at the time of going to press it was down 12% on the dollar from 22 June) the cost of imported food is expected to rise, a shift that will hit the major mults hard and leave local producers with an opportunity to plug not only their provenance but their price.

“It gives more visibility to all these independent producers,” says Jeremy Hibbert-Garibaldi, CEO at online marketplace for independents Caprera. “They’re producing in the UK and they have the capacity to source good volumes for businesses.”

James also believes that c-stores are better placed than most to market local fresh fruit & vegetables to customers who may be increasingly preoccupied about buying British now that the UK has decided to leave the EU. “With cheap imports you put a lid on the value of the domestic product,” he says. “Putting a stop to that is the bit that really excites me as we’re a big supporter of food produced locally.”

Opportunity or risk?

However, a plummeting pound could be a double-edged sword. As well as costlier imports, it’s expected to add to inflation, driving up costs across the board, both for consumers and retailers.

Food could be hit heavily, believes Alan Hawkins, group CEO at Bira. Though low commodity costs and an ongoing battle on price between the mults has given rise to a long period of deflation in the sector, a trend that continued for a 38th month in June [BRC-Nielsen Shop Price Index], it won’t continue, he believes.

A healthy amount of small retailers might not think they’ll be affected (with 26% adamant Brexit will have no impact, according to our barometer, right) but no business will escape entirely, he warns.

“In the medium term we have to accept inflation will become an issue and that will have an effect irrespective of whether you’re an importer of foreign products or not. It will also put up fuel prices sooner or later.”

Both the Petrol Retailers Association and the AA have said they expect the cost of fuel to jump by 2p to 3p per litre as a result of the UK’s decision to vote leave. “That’ll affect logistics and distribution charges,” adds Hawkins. “There’ll be a hit for everybody.”

“When the crash came the last time, fuel volumes just fell off a cliff. The speed was phenomenal,” adds James. “The wheels of industry stopped turning and the forecourt sector will really pick up on that.”

And with “consumer as king” in an unholy price war, the convenience sector won’t be able to simply pass these additional costs straight on to shelf prices, adds Hawkins.

“It’ll be meeting customers halfway and then putting in efficiencies and cutbacks” as well as making small cuts to already tight margins.

That’ll be tricky, adds industry veteran Peter Blakemore. “The competitive environment in the grocery retail has caused our margins to drop,” he says. As a result “the price we pay for goods and whether there will be inflation in the market will affect all of us.”

And none of this even begins to take into account the lay of the land after negotiators thrash out the UK’s relationship with the EU over the next 24 months, though whatever happens in that respect remains largely unpredictable, despite an unofficial blueprint from new Brexit minister David Davis. But although the long term promises risk and uncertainty, arguably it also throws up opportunities as well.

Cutting the red tape

An end to “spirit-crushing” EU red tape could now be possible, as touted by pro-Brexit farming minister George Eustice as he battled to win over industry in the run-up to Brexit. “Now is an opportunity for convenience retailers to follow through and influence in this area,” says IGD chief economist James Walton.

Top of the hit list could be the looming plain packaging tobacco directive. After an appeal was rejected in the High Court in May this year, the controversial EU law, which requires tobacco firms to ditch branded packs, is set to come into force as of May 2017. Inevitably that will create further challenges for convenience stores already forced to comply with the tobacco display ban as of April 2015. Outside the EU, however, its status isn’t clear.

Already the ACS has set out its plans to make the case for “the right regulatory framework” for the sector” post Brexit by maintaining “the laws that work and are fair” but “reviewing those where changes to regulations could promote investment and growth for our members”.

More broadly, Brexit could mark the end to “tedious” paperwork passed down from Brussels for small retailers, adds James.

“We have had to do a huge amount of ridiculous compliance form-filling so hopefully we’ll be able to get rid of a lot of that,” he says. “As a small business a lot of EU regulations we had to comply with you didn’t realise you had to comply until you fell foul.” Fraudulent booze and cigarettes - an ongoing issue for the sector - may also be easier to tackle outside the EU, suggests Blakemore, with stricter border controls working alongside the new Alcohol Wholesaler Registration Scheme.

But an end to the free movement of workers could be damaging, he believes, as “immigration has added a great deal to this country and has been a contributor to our success”. Up to 11% of staff in retail are EU migrants, according to ONS data, and up to 27% of those are employed by producers that supply small stores.

As yet, the new PM has been hard to pin down on her plans for migration, an uncertainty that doesn’t help business, warns Hawkins. “We’ll be looking for certainty that the people who are already here don’t have to be worried about going back to whatever home means,” he says.

With so much unclear, Bira, the National Federation of Retail Newsagents and the ACS have all publicly stated their intention to help shape the outcome of the lengthy negotiations to achieve the best result for convenience. It’s a far cry from the eerie quiet pre-referendum from the same trade associations. “Associations tended to take a rather safer line and didn’t want to influence the debate,” says Hawkins, with a hint of regret. “We tended to present the facts and rather sat on the fence ourselves.”

A mistake neither indies nor trade bodies should repeat in the months and years to come. If only to drown out the lingering racist minority.