- Almost two-thirds of high street retailers report that the rising cost of living has made it harder to run their business, according to new research1 from Santander UK, with 87% of those finding it hard going saying this winter is the “toughest in memory” for their business
- Santander UK research highlights the measures retail business owners are taking and their top tips to succeed in the current economic climate
- Despite the challenges they face, 24% are optimistic about the future of their business
- And almost half have taken action to support their local communities as the cost of living rises
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.
More information on the support available from Santander UK is available at www.santandercb.co.uk or to access the SME Support Toolkit, please visit: https://go.pardot.santander.co.uk/SME-Support-Toolkit.
At a glance - key insights from Santander UK’s research
Overall impact of rising cost of living on SME retailers with a high street presence:
• 65% report the rising cost of living has made it harder to run their business
• Of these, 87% say it has been the “toughest winter in memory” for their business.
Specific impacts of the rising cost of living
• 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%).
Impacts on finances
• Operating costs have increased for 80% of retail businesses in the past few months
• Average increase in operating costs is 18%
• 60% report their cashflow has been negatively affected, with consequences including:
o Having to dip into company savings (41%)
o Having to borrow money from a bank (29%)
o Having to dip into personal savings (28%)
o Running out of funds each month (23%)
• 87% say it is harder to plan for the future with the current uncertainty over costs.
Business owners’ most common adaptations in response to the rising cost of living
• 31% taking home less pay
• 28% reducing marketing budget
• 27% working unpaid hours
• 27% switching to a cheaper energy supplier
• 25% delaying new IT equipment purchases
• 68% reported these measures to have been a success.
44% of retail SME business owners have made adaptations that they would previously have felt uncomfortable with to ensure their business remains viable as the cost of living has increased, including:
• 29% holding tougher negotiations with suppliers
• 27% taking a loan from their bank
• 23% trialling different opening hours
• 22% paying to promote their business on local social media groups
• 21% using ‘buy now, pay later’ to purchase business supplies
• 79% report that these measures were a success.
(24%) report being optimistic about their business for the rest of 2023.
How retail SMEs have supported their local community to survive the rising cost of living this winter
• 47% have taken steps to help their local community
• 41% donated to local food banks
• 27% offered free food or drink to those struggling with the rising cost of living
• 26% made cash donations to local causes, organised fundraisers for local causes or donated products and services to local causes to be sold or auctioned.
Retail business owners’ top tips for running a successful business in the current economic climate
• “Get your business online” (33%)
• Reduce prices to cater to the needs of customers hit hard by the rising cost of living (31%)
• Diversify (30%)
• Use personality-driven marketing (be the face of your business) (25%)
• Get more involved with the local community (24%).
- Ends -
The information contained in our press releases is intended solely for journalists and should not be used by consumers to make financial decisions.
Notes to Editors
1) Research is drawn from a survey conducted by OnePoll of 750 UK retail business owners and decision makers on 8-13 February 2023.
2) To access Santander UK’s SME Support Toolkit, please visit: https://go.pardot.santander.co.uk/SME-Support-Toolkit
Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. At 31 December 2022, the bank had around 19,000 employees and serves around 14 million active customers, via a nationwide branch network, telephone, mobile and online banking. Santander UK is subject to the full supervision of the FCA and the PRA in the UK. Santander UK plc customers’ eligible deposits are protected by the FSCS in the UK.
Banco Santander (SAN SM, STD US, BNC LN) is a leading commercial bank, founded in 1857 and headquartered in Spain. It has a meaningful presence in 10 core markets in the Europe, North America and South America regions, and is one of the largest banks in the world by market capitalization. Santander aims to be the best open financial services platform providing services to individuals, SMEs, corporates, financial institutions and governments. The bank’s purpose is to help people and businesses prosper in a simple, personal and fair way. Santander is building a more responsible bank and has made a number of commitments to support this objective, including raising €220 billion in green financing between 2019 and 2030. At the end of 2022, Banco Santander had €1.3 trillion in total funds, 160 million customers, 9,000 branches and 206,000 employees.