3 in 10 retail small businesses predict festive downturn this year

Wednesday 22nd November 2023

Small business owners in the retail sector have a less than euphoric trading outlook for the festive period, with 31% predicting a quieter period for sales during the Christmas countdown. They are joined by small businesses in the hospitality sector, where 19% of business owners foresee a downturn in trading over the next four weeks.

The findings are from the latest quarterly Business Barometer study by Novuna Business Finance, which has tracked small business growth outlook every quarter over the last decade.

The latest data reveals that almost nine in 10 small businesses (89%) still feel that the impact of the cost-of-living crisis posts a material threat to their trading prospects. This figure is only marginally down on this time last year (92%), which suggests the ripple effect of the cost-of-living crisis is still causing significant pain to the UK’s small business community. This felt all sectors, but most prominently in hospitality and leisure (98%), retail (95%), manufacturing (92%) and agriculture (92%).

Looking specifically at how the legacy of the cost of living crisis continues to impact small businesses, the top concerns cited included customers spending less money with them (35%) and suppliers hitting them with price rises and higher charges (33%). The latter was of particular concern because 28% of small businesses also found they were unable themselves to pass inflationary price rises on to their own customers (28%).

Energy price rises continued to be a concern for 27% of small business owners, although this has fallen from the record-high 47% this time last year.

Whilst a downturn in Christmas trading was a top concern for retailers, small business owners in the manufacturing and construction sectors where most concerned about being hit by rising prices and charges from their suppliers (54% and 43% respectively). Small businesses in the agricultural sector were most concerned about not being able to pass inflationary prices on to their customers (44%) and in the media and marketing sector, the impact of the cost-of-living crisis on cash-flow volatility was a top concern (31%) - as was a rise in late payment from customers (22%).

For many small businesses, Christmas is a critical trading period and it is a real concern that so many enterprises still find themselves to be profoundly impacted by the cost-of-living crisis for the second Christmas in a row. Nationally, the growth outlook of small businesses has remained unchanged for the last three quarters. Whilst to some extend this shows resilience in the face of a challenging economic context, a weak trading period for Christmas could well give many business owners a real hangover as they start a New Year of trading.

For those established business turning attention to growth plans for 2024, we at Novuna Business Finance are committed to supporting enterprises working on strategies to transform and grow to fulfil their potential, despite the enormously challenging context.

Jo Morris

Head of Insight

Novuna Business Finance

The top adverse impacts of the cost-of-living crisis on UK small businesses

November 2023

November

2022

Customers spending less money with us

35%

41%

Being hit by rising costs/charges from suppliers

33%

44%

Not being able to pass inflationary price increases to my customers clients

28%

35%

Less customer volume

27%

33%

Rising energy prices in terms of running the business

27%

47%

Rising energy prices impact on travel and transport

22%

33%

Cash-flow becoming more volatile

19%

26%

Not being able to pay staff more in keeping with cost of living costs

17%

24%

Rise in late / non payment

14%

18%

Rising cost of finance with interest rates

14%

19%

Prospect of the quieter period for Christmas trading

12%

15%

Weak Pound / exchange rates

11%

24%

Not being able to hang on to staff

8%

9%

Notes

The research was conducted by YouGov among a representative sample of 1,107 small business decision makers, spanning all key industry sectors.