The UK’s enduring love affair with small businesses – and why it matters for retail entrepreneurs
Joe Phelan, money.co.uk business savings expert, says: “Small businesses have long shaped the UK’s economic and cultural landscape. And, in retail, their influence is especially visible. As consumer habits evolve, the role of independent retailers continues to grow in significance.
The UK has long been a nation defined by its small businesses. With 5.5 million SMEs making up over 99% of the business population, it’s no wonder they’re routinely referred to as the backbone of the economy. Among them, retail stands as a particularly vibrant sector, full of potential and opportunity for entrepreneurs looking to make their mark.
In 2024, there were 324,995 retail businesses in the UK, and over 99% of them were SMEs. This means that small and medium-sized players – from independent boutiques to family-run shops and market stalls – shape the majority of the UK’s retail landscape.
So, why should entrepreneurs still consider retail?
One of the biggest advantages for small retailers is their ability to build strong, personal connections with customers. Unlike larger corporations, small businesses offer personalised service, unique products, and a sense of belonging to the local community.
As consumer preferences evolve, more people are valuing these qualities, and are increasingly inclined to support local businesses over big-name chains.
Shifting values are an opportunity for retailers
In today’s market, buying decisions are no longer based solely on convenience and price. Consumers are increasingly drawn to small businesses because of the personal touch, the opportunity to purchase handcrafted goods, and the ability to support their local economy.
A recent Barclays report revealed an uptick in spending at smaller retailers, particularly those offering unique products and experiences. More than one-fifth (21%) of Brits now prefer to shop with smaller businesses, driven by a desire for bespoke items and a sense of contributing to local communities.
According to a Capital on Tap study, 52% of UK consumers gravitate towards small businesses because of the exclusive, often one-of-a-kind items they provide. From custom clothing to locally made jewellery, small businesses can cater to consumers who are willing to pay more for distinctive products that align with their values.
Additionally, it is worth highlighting that small businesses play a crucial role in supporting local economies. In fact, the Capital on Tap study found that 51% of consumers shop small to support their community, with 42% expressing the satisfaction of knowing that their money is directly benefiting the business owner.
How small businesses are capturing the market
Some places, like Brighton and Plymouth, have long been famed for their independent spirit and entrepreneurial culture. 38% of Brighton’s residents, and 35% of Plymouth’s, say they prefer to shop small, and this is a trend that’s spreading across the UK.
As consumer habits shift, more and more towns and cities are embracing the value of small businesses, recognising that they are not just places to shop, but essential pillars of the community and local economy.
A great example of this shift can be seen in the resurgence of independent bookshops. Once considered under threat, these stores are now thriving by offering local charm, curated collections, and personalised service that online giants can’t match.
Across the country, small businesses have become — and are increasingly becoming — integral to the identity and resilience of their communities. From artwork to handcrafted jewellery, consumers are placing value on uniqueness and craftsmanship, and they’re willing to pay a premium for it. In fact, UK shoppers say they’d spend nearly £25 more on artwork and over £20 extra on jewellery from a small business – a testament to the value placed on authenticity.
Navigating the road ahead for small retailers
As demand for unique, community-based retail continues to rise, small business owners have the opportunity to thrive. But long-term success isn’t just about having standout products or a loyal customer base – it also requires sound financial management.
In a world where large corporations dominate much of the retail landscape, the opportunity for small businesses to flourish is still strong. With careful planning, the right financial products, and a commitment to your community and customers, your small retail business can not only survive, but thrive.”