SME retailers are the lifeblood of the economy. While they don’t perhaps garner the attention that the ‘big boys’ do, the smaller, growing retailers and merchants make up a long and lucrative tail and employ countless millions of people. News that one in four of them say that they are ever just a month away from going under is shocking – even in today’s challenging climate.
The biggest problems these growing companies face, according to the research by Brightpearl comes from a combination of a shortage of goods and lengthy shipping times, along with increased shipping costs and the cost of raw materials. These are hitting at a time when revenues are down and consumer demand, while still there, is likely to start to waver.
The impact is being felt across all sectors too. Luxury is hardest hit by supply issues, with 92% of firms surveyed saying that they are having difficulty get hold of stock. Other sectors strongly impacted include DIY & gardening (73%), sports and leisure (60%), electronics (53%) and fashion and footwear (50%).
The result is that 40% of retailers are extending their online delivery times, 58% are upping prices, while 29% are instead taking a hit on margin to stay competitive.
Crucially, a separate study from Vodafone finds that a ‘guidance gap’ is beginning to emerge with 59% of SMEs having sought no support or funding from any third party, and only 11% having sought advice from large companies or business mentors. Alarmingly, 71% of sole traders were not seeking out the help they were entitled to as they didn’t identify as a SME and therefore didn’t believe the support was available to them.
However, none of these need be a problem. Shoppers are keen to embrace smaller retailers and brands, especially if they offer either value for money, locally-sourced products, or have some sort of demonstrable environmental benefit, finds a third piece of research. In fact, more than half of SME retailers told American Express that they are seeing shopper numbers rising, with 66% saying that they expect to see this growth continue into 2023.
This is likely to be driven further by investment in technology, especially relatively simple things such as social commerce and building on connecting with consumers through the channels where they look for inspiration and talk to each other. This connect to consumer (C2C) commerce model, which relies on creating novel experiences across every potential touchpoint with consumers in ways that keep them coming back, is already being tacitly sought out by consumers, who no longer want a transaction, but want to make a connection.
It need not involve costly tech investment, just a rethink of what you are trying to achieve and what consumers actually want. And now, in a downturn, is the time to invest for growth.