A new report from global finance technology company, SumUp, reveals the current confidence levels of UK small business owners and decision makers.
It surveyed 750 UK business owners and decision makers within small UK businesses to see how confident they feel about the state of the current UK market, their top growth priorities for the next 12 months, and how their confidence levels stack up against last year.
The findings reveal key challenges retail small to medium enterprises (SMEs) are facing, their growth priorities for the next year, and how their confidence levels stack up against last year.
The results detail how confidence levels among independent retailers are reporting stronger business this year. However, while small business owners and decision makers in retail remain broadly confident or neutral about their 12-month outlook, the data reveals a notable drop in overall confidence within the industry.
Just 8% of retail SMEs described themselves as very confident about the next 12 months, expecting their business to experience strong growth and success. This figure is a significant drop from 33% in the previous year.
An additional third (33%) said they feel somewhat confident, recognising potential for growth but acknowledging the challenges ahead. This also reflects a decline from 2024, when 46% of retail SMEs expressed confidence in identifying new opportunities.
Notably, almost a third (31%) report feeling neutral about the year ahead, expecting their business to remain steady, with no significant growth or decline. Additionally, a further 11% said they are uncertain, due to unpredictable factors such as customer demand and market conditions.
When asked about what the current challenges were among business operations, rising costs pose the biggest concern for small retail businesses across the UK. Half of respondents (49%) identified the overall economy as the most significant challenge facing their business. Within this, inflation, interest rates and changes in consumer disposable income were the most common concerns.
Additionally, 48% flagged the rising cost of energy, rent and utilities as a key concern, highlighting the financial pressures facing respondents.
“Customer retention is also becoming more difficult for retailers, with almost a third (31%) saying it’s becoming increasingly difficult to keep customers engaged and loyal.”
In relation to customers, almost half (46%) reported that customers are spending less, with a noticeable drop in average purchase value and overall spending habits. Customer retention is also becoming more difficult for retailers, with almost a third (31%) saying it’s becoming increasingly difficult to keep customers engaged and loyal, with the same proportion highlighting that even their most loyal customers are making purchases less frequently, impacting revenue predictability.
In addition, 20% have observed that customers are becoming more price-sensitive, often expecting discounts and promotions.
Yet there are plenty of signs of resilience. Over four fifths of retail SMEs (85%) have made strategic changes to navigate current challenges and remain resilient. For over a third (38%), this has involved making cost-saving measures across their supply chains and professional services, including switching to more affordable suppliers, streamlining logistics, or bulk-buying to secure better rates.
When it comes to pricing strategy, independent retailers are taking different approaches. Over a quarter (28%) have increased prices in order to protect profit margins, while a further 28% have lowered their prices to help customer retention.
Other adjustments include boosting a digital presence by launching a website or posting more frequently on social media (23%), improving customer loyalty programmes to encourage repeat purchasing (20%), and seeking external funding or support to strengthen cash flow (11%).
Corin Camenisch, product marketing lead at Sumup said of the survey: “We conducted this survey to discover the confidence levels of small business owners and better understand the challenges they face, gauge their optimism about their future and identify areas where support might be needed.
“Overall, confidence levels are high. This positive outlook suggests that small merchants are prepared to navigate potential uncertainties and continue to thrive.”
No comments yet