60% of consumers dissuaded from shopping at small businesses due to perceived extra expense

Uswitch research has found that 60% of consumers say they have been dissuaded from shopping at small businesses due to the perceived extra expense.

The ‘cost of living crisis has meant the prices for many essential goods in the United Kingdom have been increasing faster than household incomes. It has been wreaking havoc with many people’s finances for some time now, so how can small businesses encourage consumers to spend their hard-earned cash with them.

The research discovered that from Q1 2015 to Q4 2024, the Consumer Price Index (CPI) increased by a whopping 35.7%.

They also found that monthly electricity bills increased by a whopping 161%  between 2015 to 2024, average rent prices increased by 44.6% and UK average house prices increased by 41.3%  in the same time period.

The cost of living increases don’t stop there, with recent government stats revealing food and non-alcoholic drinks prices rose by 32.6% between 2014 and 2024, oils and fats increased 71.7%, and meat increased 23.2%.

With finances spread so thin, consumers are being more selective and discerning about where and how they spend their money.

Uswitch found that over 9 in 10 Brits (95%) said price influences their decision to shop at a small business. This highlights the fact that small businesses need to focus on competitive pricing to get customers to spend.

However, 39% of Brits said they would be willing to pay more for a product or service from a small business compared to a chain. This accentuates the fine balancing act between keeping quality high and maintaining affordability, which business owners must achieve to be profitable.

Andy Elder, Uswitch business credit cards Expert said “It seems that opinion is split amongst consumers on whether high quality or low prices are more important; almost half (49%) of Brits think small businesses should focus on offering competitive prices more, whereas 43% think small businesses should focus on emphasising value and quality. We can infer from this that the best approach may be to keep quality as high as possible whilst making sure prices are competitive for the industry. Using effective pricing strategies like discounts, bundle deals or loyalty cards could also be a good option for when a business owner wants to offer superior quality but still reassure the customer that they are getting a good deal.

“Keeping quality high likely means business costs or overheads will remain at the higher end of the scale, which could cause potential cash flow issues for some businesses. Having the right business credit card can help SMEs to make investments or manage cashflow in a way that supports them to grow and succeed.”

To what extent consumers are willing to pay more for a product or service from a small business compared to a chain

How price influences consumers’ decisions to shop at small businesses