Rising cost of living makes for ‘toughest winter in memory’ for many high street retailers
New research by Santander UK1 reveals the impacts of the rising cost of living on retail SMEs (small-medium sized enterprises) and the efforts they are making to keep afloat – and support their local communities through the current economic challenges.
Almost two-thirds (65%) of UK retail business owners report that the rising cost of living has made running their business harder, with nine out of ten (87%) of those businesses saying it has been the “toughest winter in memory” for their business.
The impacts of the rising cost of living most commonly reported in Santander UK’s poll are:
- Rising energy costs (cited by 61%)
- Increased material costs (47%)
- Customers spending less money than in the past (41%)
- Customers making fewer purchases than they used to (38%)
- Increased staff wages (36%).
Operating costs have increased for 80% of retail businesses in the past few months, rising by an average of 18%. And 60% report that their cashflow has been negatively affected by the rising cost of living, with the most commonly reported consequences being: having to dip into company savings (41%), borrow money from a bank (29%); dipping into personal savings (28%); and running out of funds each month (23%). General uncertainty over costs has made it harder for 87% to plan for the future of their business.
But these SME owners are showing innovation and determination – and almost a quarter (24%) report being optimistic about their business for the rest of 2023.
John Baldwin, head of commercial banking, Santander UK said: “These research findings show how the rising cost of living is impacting every aspect of running a business. The country’s economic recovery will be driven by the success of our small businesses, and our findings show that they will need support to manage critical decisions on budgets, wages and investment.
“We are encouraging our SME clients to contact us for support at the first sign of difficulty. As well as our dedicated relationship teams that provide bespoke support, our SME Support Toolkit2 offers all businesses a host of free, non-financial resources to support them to continue growing through the challenges presented by the rising cost of living. As we saw during the earliest stages of the pandemic, SMEs with the right support and adaptations to their business models will not merely survive but prosper.”
Not content to just look after themselves, almost half (47%) of these businesses have taken steps to help their local community survive the rising cost of living this winter by measures including donations to local food banks and organising fundraisers for local causes.
