The cost-of-living crisis, rising inflation and fears of a recession are creating considerable challenges for retailers and restaurants in the UK, according to new research commissioned by Glovo.
The research found that changing consumer habits post-pandemic, further impacted by the current economic downturn, are causing more than half (56 per cent) of businesses to see themselves unprepared for the future. In the UK, 80 per cent businesses worry about their future profitability, with 32 per cent facing the challenge of reduced consumer spending.
The study of more than 3,200 small and medium-sized food, grocery and restaurant businesses across nine markets in Europe and Africa (the UK, Spain, Portugal, Italy, Poland, Bulgaria, Kenya, Romania and Morocco) found that more than one third of SMEs (34 per cent) regard reaching new customers as their main challenge, with 25 per cent of UK businesses saying the same. In the two African markets surveyed that number is even higher, with 40 per cent in Kenya and 46 per cent in Morocco saying this is their main challenge.
The research also found that almost half of businesses in Spain (46 per cent) are finding it difficult to keep up with the pace of change. In Morocco, over half (58 per cent) of businesses are worried about their profitability, and 59 per cent say they lack the resources they need to optimise customer service.
Among the factors causing SMEs to seek additional support and solutions were changing consumer habits, high inflation, lower consumer spending and overarching macroeconomic risks.
Rodrigo Alier, Executive Director, Partners & Brands at Glovo, said: “This research confirms that, unsurprisingly, just as SMEs are moving past the hangover of the pandemic, they find themselves struggling once again. The cost of living crisis weighs heavily on their minds and their balance sheets, with more than two-thirds of businesses surveyed in the UK and nearly half of those in Spain saying they are in ‘survival mode’. Across all nine countries, an average of 46 per cent of businesses say the same. More than half of all businesses surveyed say they are unprepared for the future and with 80 per cent of UK businesses fearing the same, more must be done to give them the resources to optimise customer service and experience, and ultimately support their growth so they can thrive.”
According to the study, customer behaviour has changed considerably over the last 2-3 years, with 2 out of 3 Italian businesses stating that it was the necessity to maintain business processes during the pandemic that prompted them to digitalise. 78 per cent of UK businesses say customers are now more concerned about their digital experience than their in-person dining experience. While 67 per cent in Bulgaria say consumers are now more focused on digital than their in-store experiences.
In response, a third (33 per cent) of UK businesses see digitisation as integral to growth, and nine out of ten businesses have implemented new technologies to help them become more agile. Yet this may prove a steep challenge, with 63 per cent of businesses in Portugal saying they have never been digitised and 61 per cent of companies in Spain saying they were not digitised pre-pandemic.
Sustainability is also an increased focus for UK businesses, with 40 per cent investing in sustainable packaging options, and 85 per cent of consumers wanting to have more sustainable options in the stores and restaurants they use—a trend consistent globally.
The research also reveals that, despite the current economic turmoil, 82 per cent of UK business decision-makers say they’re targeting significant growth in the next 12 months, while 74 per cent of companies in Spain agree.
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