Growth under pressure: Nearly half of small retailers report revenue growth
Zempler Bank, the digital bank dedicated to making money simpler for UK businesses, has published new research exploring the challenges and opportunities facing the UK’s small retail businesses. The findings form part of Zempler’s new report ‘The Reinvention of the Independent Retailer’, revealing a sector pressed on multiple fronts, but using innovative methods to come out on top.
The challenges facing the sector are clear and not unfamiliar: lower consumer spending was cited as the most significant (58%); rising operating costs follow at 50% and falling footfall at 44%. Competition from online players and large chains (35%) and staffing costs (30%) round out the top five. When it comes to cashflow, supplier payments (58%) and VAT deadlines (50%) top the list of pressures.
Yet, despite the tough conditions, small retailers are not just holding their ground but continuing to grow. Almost half of businesses (48%) grew revenue over the past 12 months, 47% held steady, and only 5% reported a decline. Over three quarters rate access to finance as manageable (79%) and 64% have begun using credit as a routine growth tool rather than a distress signal.
The routes to this growth have continued to evolve to meet the modern consumer’s spending habits. Digital expansion has become central to the independent model, with two thirds selling through more channels than three years ago, 63% name growing online sales as their leading opportunity and 67% investing in e-commerce, online sales or delivery. A further 56% see AI and automation as a key opportunity, though investment here lags behind ambition, at 24%.
Rather than waiting for circumstances to improve, retailers are actively reinventing themselves. Diversification is now the default mindset, with 96% saying it is essential to future success and seven in ten small retailers have invested in stock, inventory or new product lines over the past year. Over three quarters (77%) plan to launch new product categories in the next 12 months.
Alex Rice, chief product & customer officer, Zempler Bank, said: “Britain’s small retailers are among the most creative and resilient businesses in the economy. Our research shows a sector that isn’t simply surviving. It’s reinventing itself, selling through new channels, diversifying revenue and managing cash whilst being squeezed by weaker spending, rising costs and higher interest rates. At Zempler we are working to better understand the challenges facing businesses in this vital sector so we can offer them banking that’s tailored to their real-world needs”