Home Retail Retail the only SME business sector to decline in past year, research shows

Retail the only SME business sector to decline in past year, research shows

by Ozva Admin

Retail was the only small business sector in the UK to see a drop in sales in the year to October. The Xero Small Business Index, based on aggregated and anonymous data from hundreds of thousands of small businesses, showed that UK retailers experienced a 5.1% drop in sales in October.

While sales among the small business economy overall rose 4.6% yoy, following a 7% rise in September. This shows the tough situation for independent retailers as they enter their busiest time of the year.

Despite the increase in sales among small businesses as a whole, after adjusting for the current high inflation, using the ONS Consumer Price Index (CPI) of 9.6% for October, sales actually fell a 5% year-on-year. That is, the increase in domestic sales was due to price increases and not because small businesses sold more goods and services.

The struggles of small retailers are further evidenced with a 6.6% yoy decline in the number of people employed in the sector, while wages rose 4.7% yoy in October. This suggests that retailers are offering higher wages to attract staff ahead of the festive season.

Alex von Schirmeister, UK Managing Director of Xero, explains: “As the festive shopping period begins, independent retailers need our support more than ever. They don’t have the huge marketing budgets to promote Black Friday deals. Last week’s fall statement offered little respite, so these hard-working companies will feel the pressure to make up the current sales shortfall and manage hiring challenges. We call for immediate action by policymakers to ease the burden and provide much-needed stability.”

XSBI data for October also revealed that small businesses in the north of England are struggling. The regions that experienced the largest declines in employment were Yorkshire & the Humber (-7.7% y/y), West Midlands (-7.6% y/y), East Midlands (-7.3% y/y) and the North West of England (-6.7% year-on-year). ).

This pattern is similar when it comes to sales. London experienced the highest growth (+7.3% y/y), while Scotland (+3.1% y/y), East Midlands (+3.5% y/y), West Midlands (+3.9% y/y) and Yorkshire & the Humber (+4.6% yoy) experienced the lowest sales growth.

Meanwhile, the time small businesses wait to receive their payment increased by 0.6 days to 30.5 days in October. This is the sixth increase in payment times in the last seven months.

On average, late payments to small businesses by their customers increased again by 1 day, up to 8.3 days. Payments are latest as of August 2020. Waiting longer to receive payment creates additional stress for small business owners as they grapple with their own escalating bills.

Government called to act

Last week, Xero unveiled a new report in the House of Lords outlining a four-point plan to support small business recovery, including policy recommendations for the UK government. This included:

• Build a small business growth strategy, in which the government is asked to act to create a policy that has SMEs at its core;

• Getting the government to address late payments with a variety of measures, from introducing electronic invoicing to regulating payment times;

• Promote the use of accountants and bookkeepers to help run businesses, while pushing more students to switch to accounting to avoid future shortages;

• More investment in digital skills, technology and infrastructure, in addition to reducing the tax burden on training and recycling.

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