Shipping delays, supply chain problems, staffing and the pandemic have conspired to make life tough for SME retailers – and many are not hopeful for their prospects in 2022, according to a new report.
The Staffing and supply report carried out by card payments specialist take payments limited, surveyed SME business owners across the UK to uncover how the current staff shortages and supply chain crisis is affecting small businesses.
The survey findings reveal more than two fifths (44%) of small businesses within the retail sector have experienced staff shortages while more than half (53%) have experienced supply chain issues. The combination of the supply chain issues and staff shortages has financially impacted one in three (38%) small businesses within the sector and one in ten (10%) describe the impact as critical.
Two thirds (64%) state they expect the staff shortages and supply chain issues to get worse before they get better, while two fifths (42%) of small business owners within the sector said that there is a strong chance their business wouldn’t survive if both were to continue into 2022.
As for the festive period, one in five (29%) expect the supply chain and staff shortages to cause major disruption to their customers and a further one in five (21%) expect the issues to cause moderate disruption.
How are businesses adapting?
Business owners within the retail sector are adapting their business in response to the ongoing supply chain and staff shortages issues in a bid to continue trading as well as they can.
In response to the supply chain issues, one in four (24%) businesses have introduced shorter business hours as well as limiting or changing the services they provide. A further one in five (21%) expect to change the services they provide in the next 3 months.
Regarding staff shortages, one in five (17%) have increased pay for vacancies, and a further one in five (19%) expect to do so in the next three months.
In an attempt to retain their current staff one in five (22%) have increased their pay, and a further one in five (18%) expect to increase pay over the next 3 months. Over a third (38%) of retail SME’s have also introduced flexible working to retain staff as well as improving working conditions and job perks (35%).
As businesses within the sector adapt their business to survive, one in four (25%) state they have had to change or delay growth and development plans for the business.
Customers are also facing the brunt of the supply chain and staff shortages issues, as one quarter (25%) of business owners state they have already raised prices for consumers, one in five (17%) state they plan to within the next three months and a further one in five (18%) plan to do so within the next 3-6 months.
Of those that have increased prices, one in five (19%) have increased their prices by 10%-20% and over one in ten (13%) have increased their prices by a staggering 20-30%.
How long will the issues last and what support is needed?
Two fifths (43%) of small business owners within the retail sector believe the issues with both the supply chain and staff shortages are set to continue for 2-5 years.
With that in mind, small business owners within the sector are calling on the government for support as these issues continue.
Over two fifths (44%) are calling for tax breaks specifically for small businesses to help overcome the financial implications both issues are causing small businesses. This is followed by army involvement to plug gaps such as fuel delivery (31%) and paid training programmes (25%).
Sandra Rowley at card payment solutions provider takepayments limited comments: “Until the supply and staff shortage issues are overcome, small business owners across the UK could continue to be hit by negative financial implications which may ultimately lead to further increases in consumer prices.
Small businesses within the retail sector are calling on the government to introduce a tax break to help them financially navigate through this climate. This support would help relieve the financial pressures their businesses are facing, whether it’s increased stock costs due to supply issues or delaying the growth of their business.”
