Small businesses losing customers as prices increase

New research by Santander has indicated that 80% of smaller firms are struggling to compete with the lower prices offered by larger firms, meaning 72% are losing customers.

While 73% believe the current economic climate is making it harder than ever to compete, 69% said they have no option but to increase their prices.

The report says many small businesses recognise the difficulty in matching their larger competitors in terms of price, 67% said they can offer customers a more personalised service and 42% believe they have more flexibility to reach niche markets.

Four in ten think the quality of their products is better than that of large companies.

The poll also saw 76% say some of their customer base has been understanding or supportive following their price increases.

John Baldwin, Head of Commercial Banking at Santander said “It’s clear businesses of all sizes are facing into a tough winter – however, our conversations with SMEs find them increasingly resilient and resourceful.”

“They proved during the pandemic that with the right support and adaptations to their business models, they could survive – and, in some cases, even prosper.”

“Many have already adapted their business models, enhanced their products, explored and exploited new markets, developed new skills, and reviewed their costs and pricing to counter the spiralling cost of supplies, energy, and labour.”

“We are acutely aware many SMEs face very challenging times, but we are here to help and support them in whichever way we can.”

“SMEs are the lifeblood of the UK economy and loved by consumers – where they can, people want to shop local and support local businesses, which is encouraging.”

“That’s why we’re doing everything we can to offer support to these SMEs through our toolkit – and I’d urge everyone who can, to do the same.”