Two thirds of high street retailers struggling with rising cost of living

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 according to a new poll by Santander.

The data revealed the biggest challenges for small firms, with rising energy costs (61%), higher material costs (47%), and customers spending less (41%) the most commonly cited concerns.

The survey saw 65% of SMEs say the cost-of-living crisis has made it harder to run their enterprise. Of the 750 retailers polled, 44% have taken steps outside of their comfort zone to keep their business viable – including 27% taking out a bank loan. More than a fifth (21%) have used buy now, pay later schemes to purchase business supplies, while 29% have negotiated better deals with suppliers.

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. “