- Brits are still supporting small businesses, despite rising prices
- Over three-quarters (78%) of shoppers say they use small businesses
- 83% of UK adults’ spending habits have changed because of increased living costs
Consumers are still shopping at small businesses despite the cost of living increases, new research by GoCompare business insurance has revealed.
A recent poll by the insurance comparison site found that over three-quarters (78%) of UK adults back small shops, showing their support for independent companies during tough times. SMEs – Small and medium-sized enterprises – are likely to welcome this support as they are at a higher risk from the recent price increases due to slimmer profit margins (when compared to large enterprises).
Surprisingly, over two-thirds (67%) of consumers said that the cost of living increase has had no impact on their decision of whether or not to shop small. Although 33% admitted it had changed their view, this wasn’t all bad news for business owners; over a quarter (27%) of those whose minds had been changed said they were now shopping at small businesses more often to support them with rising costs.
FSB National Chair, Martin McTague, said: “Rising operating costs are eroding small business margins in a way that many have never experienced before. Unlike big corporates, small firms don’t usually have the leverage to negotiate the best deals on utilities, which are the primary driver of higher outgoings for many.
“Small firms find it hard to pass on higher costs to customers in the form of higher prices, fearing that doing so would add extra burden to consumers under the current cost of living crisis, but more and more are being left with no choice.”
Matt Sanders, business insurance expert at GoCompare, commented: “During a turbulent time for small businesses and consumers alike, it’s great to have some positive research which confirms that shoppers are still supporting local and independent companies.
“Unfortunately, due to continued rising costs, more businesses will likely need to pass prices onto the customer. In this case, SMEs must focus on delivering a quality service that keeps people coming back.
“Meanwhile, there are a few ways that business owners can try to cut costs. Where possible, aim to renegotiate with your landlord and vendors to secure cheaper deals. Plus, review all outgoings and sell any unused assets to help improve cash flow.
“Check if any grants are available to you through your local council, the government or other organisations. Finally, make sure you regularly compare any financial products to ensure you’re getting the best price possible and are avoiding loyalty penalties.”
The report also finds that the cost of living crisis has impacted consumer buying habits, and reveals that Brits will cut down on certain goods and services to save money. Takeaways and other food service companies are most at risk, as 50% of UK adults say they will give up ordering their meals, and 42% say they will stop dining out.
According to recent Government data, 27% of businesses have reported the need to pass on price increases to the customer. The hospitality industry had the greatest need to do this, suggesting customers are seeing the highest cost increases in this sector – which could be the reason that consumers will cut these services from their budget.
Other companies at risk of losing custom include streaming giants such as Netflix and Spotify. Over a third (34%) of respondents say they will unsubscribe to such platforms as money becomes tighter.
More information about the research (including additional facts, figures, and infographics), can be found on GoCompare’s website.